Sony in a groundbreaking move are showing its animated hit “Cloudy With a Chance of Meatballs” via Internet enabled televisions and Blu-ray players before it gets its DVD release.

It’s the latest move by Hollywood who are looking for a way to recoup the massive losses in home entertainment.

Its an interesting change in the movie industrys ‘release windows’ for top movies, because Hollywood has previously been reluctant to change because of losing profits on DVD sales and upsetting its biggest customer, Wal-Mart. However the decline in DVD sales, which is down up to 25% at some studios, has meant that looking for new ways to distribute movies has become a top priority.

The price of the film, $24.95, is high enough not to alienate retailers, Sony said.

“We don’t need a war with Wal-Mart or any other organization, and I don’t think they’re hostile to this,” said Howard Stringer, the chief executive of Sony. “It will make televisions more valuable, and that’s a good thing.”

Sony Pictures Entertainment, the only Hollywood studio tethered to a major hardware manufacturer, is in a unique position to experiment with selling movies directly to consumers through television sets, in this case Sony’s Bravia Internet-enabled sets.

As part of this new trial, “Cloudy With a Chance of Meatballs” will also be available through Sony’s networked Blu-ray Disc players, which came on the market last month.

Hollywood is currently looking for ways to capitalize on film distribution via the internet.

“The time when a majority of consumers have Internet-enabled TVs is a long way off,” said Richard Greenfield, an analyst at Pali Capital. “But it’s moving the ball in the right direction.”

“Cloudy With a Chance of Meatballs,” Sony’s biggest animated hit, was released in September and has generated almost $174 million in worldwide box office receipts, according to Box Office Mojo, which tracks movie ticket sales.

It will be available to owners of Sony Bravia sets and Blu-ray players with Internet capability from Dec. 8 to Jan. 4, the day before the movie is released on DVD. Sony is looking to eventually distribute movies across a wider range of devices, including its PlayStation console.

In addition to the industry ramifications, the experiment is important to the vision of Mr. Stringer for Sony’s two pillars — hardware and content — to work together profitably. “The process of moving to the next stage of content delivery is as inevitable as night and day,” he said. “And we’re the only company that can do this because we own hardware and content.”

Sony hopes later to entice other studios to make their films available to owners of Sony televisions, bypassing cable and satellite companies that offer their own video-on-demand services.

Hollywood and cable and satellite companies have been reluctant to offer films over video-on-demand before their release on DVD because of the threat that movies will be copied with digital video recorders and other devices. The Motion Picture Association of America recently filed a letter with the government seeking approval to block technologies that allow the copying of high-definition movies on cable set-top boxes.

Mindful of the music industry’s contraction after the collapse of compact disc sales, Hollywood is frantically trying to develop new sources of home entertainment revenue. In the third quarter, according to the Digital Entertainment Group, spending on home entertainment was about $4 billion, down 3.2 percent. But spending on DVDs, which has been the profit engine for the movie studios, was off 13.9 percent. Spending on rentals of DVDs, which provide smaller profit margins than sales, was up about 10 percent.

Meanwhile, at some studios the decline in DVD sales has been steeper. At Paramount, for example, which is owned by Viacom, movie ticket sales rose 16% in the third quarter, whilst home entertainment revenue was down 21%.

It looks like movies over the net will be happening more frequently as Sony tried a similar experiment last year with its Will Smith movie Hancock which has obviously shown them a way movie distribution can go.

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