DVD Deal Lets Films Go From Web to TV

By Dawn C. Chmielewski
Times Staff Writer

July 19, 2006

Hollywood studios will cross a significant technological and psychological frontier today when they offer the first downloadable movies that can be legally burned onto a DVD.

Four major studios struck a deal with online movie service CinemaNow Inc. to offer more than 100 mainstream titles that can be copied to a disc and played on almost any DVD player or television set. Prices will start at about $9 a movie.

The deal was hailed as a milestone in Internet distribution, giving film fans what they've long demanded: the convenience of downloading a movie and playing it on the living room TV.

Today's launch also previews a likely agreement between the major studios and Apple Computer Inc., which is expected to expand the offerings on its popular iTunes online store to include big-studio movies. Several studio executives Tuesday confirmed that they were holding talks with Apple but did not want to be named because of the sensitive nature of the discussions.

Apple declined to comment.

Coupled with the CinemaNow agreement, an Apple deal would cement the Internet as a viable film distribution vehicle. Although studios have offered online movies since 2002, fears over piracy have kept the films locked to computer hard drives or to discs that play only on a PC. That restriction has kept the market for legal movie downloads relatively limited.

"Burning is important to consumers," Universal Pictures Vice Chairman Rick Finkelstein said.

As with record labels' reluctant steps into online distribution a few years ago, the major studios are "not embracing it with both arms yet," said David Card, vice president of Jupiter Research.

CinemaNow's service uses relatively new anti-piracy technology that prevents a burned DVD itself from being copied. Because that technology is still being tested, the initial batch of titles being offered was described by Forrester Research analyst Josh Bernoff as what's left "at the video store when you arrive too late and the shelves are picked clean."

Among the initial releases: "Charlie's Angels: Full Throttle," "Barbershop" and "Scent of a Woman."

If CinemaNow's anti-piracy technology proves effective, studios can be expected to offer newer and more popular movies. This year, for instance, the major studios began selling big movies online the same day they were released on DVD, ending a practice of delaying each film's Internet availability for several months.

Studio executives hope that as more titles become available online, Internet services will emerge as a way for movie fans to buy niche or older films that can be difficult to find at mass-market retailers. Some retailers that sell on the Web are considering starting their own online movie services.

"We see this as additive to the packaged media business because, functionally, retail cannot carry every title," said Benjamin S. Feingold, president of Sony Pictures Home Entertainment. "I think that's good. If you can access 'My Beautiful Laundrette' — that's the classic example of a picture at some point you'll be able to instantly download and make a copy for yourself. That's pro-consumer."

In addition to Sony and Universal, Walt Disney Co.'s Buena Vista Home Entertainment and Metro-Goldwyn-Mayer Inc.'s MGM Home Entertainment are working with CinemaNow. Not represented among the major studios are 20th Century Fox, Paramount Pictures and Warner Bros.

"Some of them got it, got excited about it and felt more compelled to work with us quickly and jumped on board and said, 'Let's really put this through the paces and see if this is something we want to do,' " CinemaNow Chief Executive Curt Marvis said. "Others said, 'Yeah, it's very interesting but we're going to take a wait and see approach.' "

CinemaNow is offering DVD burning before its main rival, Movielink, whose owners include the studios licensing their movies to CinemaNow. Movielink said Monday that it had struck a deal giving it the technology to offer DVD burning, but the company has yet to announce any content deals.

As with DVDs purchased at a store, the movies downloaded through CinemaNow can be played on virtually any DVD player with full remote control navigation and access to special features available on regular DVDs. Movie buffs can also print a DVD label and cover art. While a film downloads, a viewer can start watching it on a PC using Windows Media Player software.

CinemaNow said standard-length movies would take about three hours to download.

Its effort to offer burnable downloads has been a seven-year quest for CinemaNow, a Marina del Rey company founded in 1999 at the height of the dot-com boom. It offered its first mainstream pay-per-view movies via the Internet in February 2002 and, two years later, allowed customers to keep permanent copies of films on their hard drives.

Legal DVD burning was the final hurdle. Online file-sharing networks offer free access to pirated movies with no copying restrictions. And the studios have fought to block sales of software that enables people to make unauthorized copies of their DVDs.

CinemaNow in the spring launched a closely watched online experiment with pornography producer Vivid Entertainment Group. That service, which allowed DVD burning, served as a high-profile test for the mainstream studios and demonstrated that CinemaNow's anti-piracy technology was robust enough and could produce discs playable in a standard DVD player.

"We began taking this around to the studios two or three months ago," said Marvis. "As you can imagine, it's been a challenging process to convince them of everything."

The limited scope of titles available in the initial phase of CinemaNow's service will limit its usefulness for learning whether consumers are ready to pay to burn DVD movies at home, analysts said.

"It's difficult to learn things when you don't have a real live hit, so your test case isn't as good as it could be," Jupiter's Card said. "If they had a fairly full collection of current popular hits, then you might say I'm learning about how much demand there really is for these services, what kind of digital rights management consumers would put up with, how is the ease of use?"

Forrester's Bernoff said the studios wouldn't be able to measure the potential of online movies until they started offering blockbusters.

"There's a huge amount of interest in this," he said. "The results of this will be scrutinized very closely. I just wish they'd come out with something better than 'Charlie's Angles: Full Throttle.' They need movies that people want to pirate."