analysis | How Sony’s release of “The Interview” online could change the film industry

Sony Pictures has just announced the simultaneous release of controversial film “The Interview” through internet video-on-demand services in tandem with a limited theatre release.

Make no mistake, this is huge.

Never before has an industry stalwart like Sony chosen online distribution simultaneously with a theatrical run. Should online releases of “The Interview” generate significant returns and positive consumer feedback, the film industry would be forced to reconsider their approach to digital distribution. Theatres could be inclined to release future films both in theatres and online.

In a surprise move, Sony has also secured distribution deals with Microsoft and Google, supplementing Sony’s own online video-on-demand services. Piggybacking on the hype generated through the high profile hacking scandal at Sony, these deals could provide Microsoft and Google’s online VOD services with much needed visibility as they struggle to make headway in a market dominated by incumbents like Apple’s iTunes and Netflix. In particular, Google’s release of “The Interview” on their relatively unknown YouTube VOD service could increase consumer mindshare, something the service has struggled with in spite of the enormously popular YouTube brand.

A dual release model would represent a major victory for the consumer. As moviegoers are given the choice between watching a new movie in theatres or in the comfort of their own homes, theatres would necessarily lower costs and provide additional value to entice consumers through their doors. This may spark a new golden age in the moviegoing experience, one in which theatres provide additional amenities and offerings not typically found during the home experience.

Simultaneous distribution is typically used by smaller studios that do not have distribution agreements with large, nationwide theatre chains. By releasing films online while they play in theatres, small studios can reach the largest possible audience before a film loses any momentum it generates. In contrast, larger studios stagger their releases so that theatres can extract the maximum profit from a film before it is released online and on physical media, where it generates profit solely for the studio.

But for a behemoth like Sony to simultaneously distribute a film online is unprecedented. As unusual as it may be given their track record, Sony could become one of the most forward thinking studios out there. Sony has just upended the traditional model, and it’s the consumer that comes out the ultimate victor.

opinion | Sony cyberattacks unlikely to be work of single agent

A surprising number of people have raised the possibility that the Sony cyberattack is the result of an inside job, in particular that of a single rogue agent. The narrative is that the attack was the work of a disgruntled employee, one with access to critical computer infrastructure throughout Sony. After compromising the system and leaving behind enough red herrings to make North Korea seem culpable, the perpetrator triggered the attack right when North Korean anger against the film would be highest, manipulating all sides against each other.

Already we’re assuming the employee is (1) disgruntled enough to actually launch an attack and (2) has deep access to Sony’s computer infrastructure. Fair enough, but for the narrative to work, the perpetrator must also have (4) intimate knowledge of the studio’s film release plans, (5) keen awareness of the geopolitical tensions surrounding North Korea, and (6) be a smart enough hacker to execute an attack of this scale, cover his own tracks, and leave enough leads for investigators to suspect North Korea.

If the leaps in logic needed to follow this narrative haven’t already caused a minor aneurysm, we must now also assume the perpetrator has crazy good timing and is fearless enough to raise the ire of various government agencies. Throw in an underground lair and we’ve got a cross between a Bond villain and The Joker.

Is it possible that an inside man had a hand in instigating this attack? Absolutely. It seems close to impossible for the perpetrators to carry out such an attack without inside information about which databases to breach and how. But to suggest one man brought a behemoth studio to its knees seems unlikely at best, and to further say that somehow North Korea is entirely exculpated is naive.

Sony cyberattacks: Why Sony may not be able to distribute “The Interview”

Sony has recently been facing calls to release its controversial comedy “The Interview” following a massive cybersecurity breach of its computer systems. It seems that everyone, from technology journalists, business commentators, and even President Obama himself has tried to compel Sony to distribute the film. The clamor has intensified in the wake of Sony’s cancellation of the theatrical release, with some calling for its distribution through nontraditional means such as downloads and streaming services. Pundits argue that by releasing the film, Sony can even claim the moral high ground, defying the perpetrators and taking a clear stand for freedom of expression in film.

While the idea is not without merit, Sony may not even be able to legally release their own film. The hacking group perpetrating the attack, Guardians of Peace, have made it very clear that any distribution of the film would invite an attack. If Sony were to release or otherwise distribute the film, resulting in any kind of attack against viewers, Sony could be held legally liable for negligence in failing to take precautions against a foreseeable circumstance. Potentially, Sony’s insurers could discharge their obligation to defend against any resultant legal action, and Sony would be left dealing with any lawsuits on its own.

The legal concept can be distilled quite simply: When a bomb threat is made against a school, the credibility of the threat is irrelevant; the school is locked down and searched until it is deemed safe. If the school were crazy enough to carry on as usual and an attack were to occur, the school would be held responsible for not taking precautions.

The threats against Sony may not be empty, either. This is not some random 14-year-old girl making threats on Twitter. The perpetrators have already brought Sony’s computer infrastructure to its knees, and while the threat is decidedly outlandish, there is the slight chance that the hackers could follow through. All it takes is a single attack, however minor, for the perpetrators to fulfill their end of the threat.

Make no mistake, the film has instantly earned cult status for triggering a devastating cyberattack against a large multinational before it was even released. That makes it worth watching not necessarily because the film will be “The Great Dictator” of our generation, but because like many others, I am desperately curious to see if it really was worth the concerted effort needed to launch the cyberattack. (Whether the attack on Sony is merely a “test launch” of North Korea’s cyberwarfare capabilities is another issue altogether.)

I would love to be proven wrong and have the film see widespread release. But Sony is faced with an uncomfortable decision. They may not legally be able to distribute the film even if they wanted to. The leak of unvarnished, sometimes bitingly candid emails has robbed Sony of any pretense of privacy. But by being forthcoming with the circumstances, revealing why they chose not to release the film and how they are dealing with the crisis, Sony can counter any misinformation before it becomes gospel—for instance, allegations of being submissive to the attackers.

After all, with the amount of information already released, they have very little to lose.

opinion | Sony cyberattacks require strong, fearless leadership

What made headlines about the recent cyberattack on Sony was not the revelation that Hollywood is filled with big shots and bigger egos. I doubt that many would be surprised to hear about such rancor in a big name studio—an industry in which narcissism is the key to stardom. Like a sewer main break in the midst of AnyStreet, USA, the shock came not from the stink, but from the suddenness and the scale.

And boy, does it smell.

Documents and emails between executives describing working relationships in harsh, stinging language. Leaked social security numbers, passports, and paygrades. And with each passing day, the inaction of the Sony parent company erodes the consumer trust the brand has worked so hard to build.

The diversity of Sony’s business is breathtaking. While it does not enjoy the truly frightening reach of the Korean Chaebols, the venerable conglomerate has managed to build a reputation among consumers for quality. This “halo” effect gives all of their operations a sheen of quality and reliability—even those beyond their traditional strengths as a premier electronics manufacturer. However, the reverse is also true. Just as technological excellence in electronic manufacturing gives the brand a positive mindshare in consumers, so too does a mishandled crisis infect a sterling reputation; some consumers are indeed “once bitten twice shy.” The mishandling of brand management quickly turns from an asset to a liability, and reflects poorly on all Sony products across the line. The company already holds a poor reputation among video game enthusiasts for the high profile hack of its PlayStation network. Given the scale of the crisis now enveloping the American movie producing arm, damage control should have been in overdrive from the start, with the uppermost echelons doing what managers do best: managing the crisis.

The surprising inaction from the Japanese parent company makes sense in context. Best to let the American arm handle the fallout, publicly lop a few heads once the dust settles, and carry on as if the throbbing shiner on the side of Sony’s face was “just a wee little stumble early in the morning—honest!” For any manager to handle this crisis would be to accept responsibility for any subsequent damage, even becoming the punching bag for all those slighted egos and damaged reputations. But without a rally point, a steady voice at the helm, with every passing second the Sony brand becomes more closely associated with noxious relationships, poor security, and worse, ineffective leadership in times of crisis.

The truly outstanding leader is one that can successfully navigate a company through a predicament. Conversely, the mark of ineffective leadership is a cycle of inaction and the shirking of responsibility, allowing misfortune to tarnish and infect a brand that took so long to build.

And like a sewer main break, the smell of poor management tends to linger.

analysis | A simple explanation of bitcoin

Throughout human history, gold has always been favored as a currency for having other useful purposes aside from serving as money. By finding use as radiation shielding, a nonreactive tooth filler, or as computer hardware conductor, gold has something called “intrinsic value,” meaning it is something worth trading for. A challenger to the golden throne, and to the equally posh thrones of other currencies around the world, has emerged, and its name is Bitcoin. But bitcoins don’t possess intrinsic value—they’re simply a string of code, with no other use except as money, the digital result of computing power, energy, and time. So if bitcoins are by themselves worthless, why are they in such high demand, where the shutdown of Silk Road, the theft from Mt. Gox, or the Winklevoss buy-in is enough to grab headlines around the globe?

Cryptocurrencies are not a new concept, but none have attained the scale and reach of Bitcoin. The term first surfaced in a 2008 paper written by “Satoshi Nakamoto,” which outlined a secure, anonymized, and irreversible cryptocurrency, decentralized and controlled by no central authority. The concept gained momentum during the 2008 financial crisis, when widespread distrust of established banks and currencies had peaked, and since then bitcoins have been on an upwards streak, to the dismay of governments and left-behinds everywhere.

The recent and unprecedented theft of thousands of bitcoins from the Mt. Gox exchange in Tokyo has further fueled questions about Bitcoin’s legitimacy and stability. Most debate stems from how it works as money: Is it really money if it’s nothing more than strings of code? (Yes.) Isn’t all money pretend money too? (Yes and no.) And fundamentally, what gives a bitcoin value? Bitcoins are money, but the properties that make them so unique are the very things that will work against its own widespread acceptance. The answer lies in the most basic form of economics: bartering and trading.

In a barter-based economy, one with direct exchanges, money serves as a substitute, an IOU of sorts. A chicken farmer that typically traded three leghorns for a goat could instead give the trader a token representing his promise to pay three chickens. This token could be passed around to others, and was considered valuable because it could be returned to the first farmer in exchange for three chickens.

However, if our chicken farmer decides to renege on his promise to pay three chickens, the token then becomes worthless. The money is useless without someone to trade it with. There are two solutions to this problem: make the token itself something valuable, or ensure that a third person will still consider the token worth three chickens even if the farmer doesn’t.

While gold best illustrates the first solution, the third-person solution forms the basis for most “fiat” currencies: It’s why dollar bills contain the line “This note is legal tender for all debts, public and private”, or why British banknotes contain the phrase “I promise to pay the bearer on demand the sum of so-many pounds.” The token itself is a worthless slip of green cloth, but the government provides a “safety net,” ensuring that even if everyone stopped using the token as currency, it can be brought to the government, which will provide you with goods and services in exchange for that token. This promise to pay is what gives money value.

In contrast, if everyone stopped using bitcoins as currency, no government or organized body will accept a bitcoin as payment in exchange for goods or services. Retailers and governments that currently accept it do so only because it can currently be exchanged with another party back into goods or services. This is the major weakness behind Bitcoin: A bitcoin has value as long as other people still believe someone will give goods or services in exchange for that bitcoin. But once people start reneging on this promise, it loses value because there is no government that will give you a good or service in exchange for that token.

The only way Bitcoin can attain the same stability (and therefore widespread use) as established currencies is through the creation of a “safety net,” a group of people like a corporation, government, or structured entity large enough to ensure that even if everyone refuses to accept it, the group will still treat it as money in exchange for goods and services. Ironically, the creation of a structured and centralized group is the very thing Bitcoin was engineered to oppose.

The mechanics behind bitcoin are valid, but because bitcoins depend on other people accepting it as a currency, their actual value remains uncertain, creating volatility. Until a group large or powerful enough is able to provide Bitcoin with a safety net, it will always remain volatile, but the creation of such a group will stand against its very mission of being a decentralized currency.

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Originally drafted 28 September 2014

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