Hollywood studios to offer digital movies for sale

CIOL Bureau
New Update

By Bob Tourtellotte


LOS ANGELES - Two online movie services, Movielink and CinemaNow, on Monday said they will begin selling major films such as "Memoirs of a Geisha" on the same day DVDs are sold at stores in a watershed event for Hollywood in the digital age.

Movielink said it signed download-to-own deals with six major studios, and CinemaNow unveiled similar pacts with two big players as well as independent LionsGate Entertainment Corp., the studio behind this year's Oscar winner "Crash."

"This is an endorsement that digital delivery of high value content has finally arrived," Movielink Chief Executive Officer Jim Ramo told Reuters.


CinemaNow CEO Curt Marvis called it "one giant step for digital distribution."

Until now, both services offered digital movie downloads for a rental period only. Some films have been available to buy, but mainly those movies have been B grade flicks.

This week Movielink will begin selling copies of award winning gay romance "Brokeback Mountain." Future releases include "Harry Potter and the Goblet of Fire," "The 40-Year-Old Virgin" and "King Kong." CinemaNow will have comedy "Fun with Dick and Jane" and horror hit "Saw II" among others. Both services will have hundreds of new and old titles available to own.


Movielink's deal is with Universal Pictures, Sony Pictures Entertainment, Warner Bros, Metro-Goldwyn-Mayer Paramount Pictures -- the studios that own Movielink -- as well as Twentieth Century Fox. CinemaNow signed Sony, MGM and Lionsgate, which holds a big stake in CinemaNow.

Movielink's prices will range from $20 to $30, but could go as low as $10 for older, "classic" movies. CinemaNow's will range from $9.95 to $19.95.

Both sites will allow consumers to copy digital movies for backup use. Those copies will be software protected so they can not be burned onto DVD discs and replayed on DVD players.



Both Ramo and Marvis said they expect further deals with the remaining major studios to come in a short period of time. Likewise, Universal Pictures President Rick Finkelstein said he expects to be signing pacts with other online services.

"There is nothing proprietary about this," Finkelstein said.


For years, Hollywood's major studios have been reluctant to offer new movies for sale in digital form for many reasons including the fear of piracy, which on DVD and videocassette costs more than $3.5 billion a year in lost revenue and unknown millions more in illegal swapping of digital files.

The studios also debated whether offering digital downloads would cannibalize sales in the booming DVD market, but DVD sales growth is now slowing while downloads of digital video recently have started to take-off.

All the players said Apple Computer Inc.'s deal with The Walt Disney Co.'s ABC television network to make TV shows available on Apple's iTunes music Web site was a key event; iTunes' subsequent success in selling TV show downloads has shown there is a growing consumer appetite for video.


Moreover, the second half of 2006 is expected to bring a number of TV devices, such as Intel Corp.'s new, compact Viiv PC, that allow consumers to connect their TV directly to the Web and download and store movies at home.

"We're seeing, not only a crossroads in consumer demand, but the ... problem of getting the Internet connected to the TV is starting to get solved," Ramo said.

Universal Pictures is operated by the NBC Universal unit of General Electric Co.. Sony Pictures is owned by Sony Corp., Warner Bros. by Time Warner Inc. and Paramount Pictures by Viacom Inc. Twentieth Century Fox is owned by News Corp. Metro-Goldwyn-Mayer is owned by a consortium of investors including Sony and Comcast Corp.