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Studios Take First Steps in Online VOD Distribution; Indie Companies Tentative So Far

Indiewire By Indiewire | Indiewire April 4, 2006 at 10:12AM

The Hollywood studios (with the exception of Disney) announced Monday the launch of a new movie downloading service that will release films on DVD and via online video-on-demand (VOD) on the same day. The tandem initiative from Movielink.com and MGM, Paramount, Sony, Fox, Universal and Warner Bros. studios begins today with the debut of the Oscar-winning "Brokeback Mountain" on both DVD and via online VOD, but at a higher price and with more restrictions than currently seen in traditional DVD distribution. The news, along with a separate announcement by Cinema Now opening a similar online store in cooperation with Lionsgate and select studios, marks the first steps into an online movie marketplace aimed at luring viewers to create their own digital film library. Reacting to the announcement, some indie distributors seem particularly cautious as they wait to see how profitable the initiative is.
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The Hollywood studios (with the exception of Disney) announced Monday the launch of a new movie downloading service that will release films on DVD and via online video-on-demand (VOD) on the same day. The tandem initiative from Movielink.com and MGM, Paramount, Sony, Fox, Universal and Warner Bros. studios begins today with the debut of the Oscar-winning "Brokeback Mountain" on both DVD and via online VOD, but at a higher price and with more restrictions than currently seen in traditional DVD distribution. The news, along with a separate announcement by Cinema Now opening a similar online store in cooperation with Lionsgate and select studios, marks the first steps into an online movie marketplace aimed at luring viewers to create their own digital film library. Reacting to the announcement, some indie distributors seem particularly cautious as they wait to see how profitable the initiative is.

The Movielink service, not available to Mac users because Apple is understood to be pursuing its online movie store via iTunes, allows buyers to access a DVD quality download of the film for 24 hours or purchase the download for long term viewing at prices ranging from as low as $10 for older films, and up to as much as $30 for new movies. In addition to the new films available on the day of the DVD release, Movielink also unveiled a library of titles available for immediate download by customers, including "King Kong", "Good Night, and Good Luck", "Walk the Line", "Memoirs of a Geisha", "Hustle and Flow", among others. And also Monday, Cinema Now announced its own debut of a similar program, in cooperation with Lionsgate and select studio.

While some indie companies have experimented with other forms of day and date releasing, such as theatrical and DVD distribution on the same date from Magnolia Pictures or theatrical and cable-on-demand distribution from IFC Films, no other distributors have widely embraced simultaneously releasing movies on both DVD and online download as of yet. Reached today, a number of smaller distributors said that they are still exploring the concept.

"It's an inevitability, but whether it is something we need to do now or not, well, the numbers will speak for themselves," explained Strand Releasing co-president Jon Gerrans, in an email exchange with indieWIRE today, "When we see persuasive data justifying a simultaneous release, we will do it." Strand has previously explored a similar online VOD program through DIVX for six months, but Gerrans explained that the revenue from the initiative did not justify the effort. So he emphasized that they are taking a "wait-and-see" approach.

Marc Mauceri, a VP at First Run Features, explained that his company is exploring online VOD opportunities, certain that it will increase the potential audience for independent, documentary and foreign language films, but unsure whether it will increase revenue. The company is not ready to divulge details, but sees the possibility of expanding into VOD in the next few months.

"No one knows yet," Mauceri explained regarding the potential for such services, adding, "But it's probably worth exploring."

Over at Palm Pictures, the company has already established a VOD channel on the Comcast cable system, showing a mix of Palm films and other titles as well. The films are screened once they have already become available on DVD, but company head of acquisitions and productions David Koh explained that with the windows between theatrical and DVD distribution collapsing, other revenue streams like VOD and digital downloading are important to consider. "(They) add more revenue streams and are perhaps new ways outside of the traditional ways to make money to make a film more profitable," said Koh, in email comments to indieWIRE.

Among the hurdles for a streamlined experience via the new online VOD system are sharing and storage. Indeed, Movielink customers can create a permanent library and view it on up to three PCs, but movies can only be transferred to a DVD in Windows Media format. However, the films can be streamed in the home using a Media Edition PC that will allow customers to watch the film on TV via an Xbox or other hardware. In a phone call with journalists, reps for the participating studios expressed a commitment to simplify the procedures. Plans to offer HD versions of films are also in the works, the studio executives said.

"The studios are embracing the Internet as a viable distribution platform for their movies, and providing this service will also help to convert Internet pirates into legitimate customers," said Movielink CEO Jim Ramo, in a statement Monday. "Movielink has carved out a position in the broadband market as the place to come for high quality long form entertainment, and we intend to continue to expand consumer options as the Internet delivery of movies becomes a significant channel of distribution."

"We are focused on traditional forms of distribution but have our hand in the new ways of digitally distributing both on the film side and on the music side," said Palm Pictures' David Koh, in comments to indieWIRE, "I am not sure what technology will proliferate or be dominant but it all looks like the consumer wants to have specific content curated for them and also available to them when and where they want it. The technology is more a thing of convenience and also acts as a way for the smaller companies to compete with the larger studios without the same outlay of money."





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