Start Selling Movie Downloads (Update3)
April 3 (Bloomberg) -- Major Hollywood studios began selling Internet downloads of their movies, including hits such as ``King Kong,'' the first time they have allowed U.S. consumers to buy films online and keep them on computers.
Starting today, closely held Movielink LLC is selling films from Sony Corp., Metro-Goldwyn-Mayer Inc., Paramount Pictures, Twentieth Century Fox, Universal Pictures and Warner Bros. Another company, CinemaNow Inc., is offering films from Sony, MGM and Lions Gate Entertainment Corp.
The studios are turning to the Internet to cut distribution costs and counter slowing growth of DVD sales. Both CinemaNow and Movielink will offer films the same day they are released for sale on DVD, the companies said today in separate statements. Universal Pictures and Warner Bros. previously announced plans to sell movie downloads in Europe.
``This is a beginning of the studios searching for the next big growth market,'' Curt Marvis, chief executive officer of Marina Del Rey, California-based CinemaNow, said in an interview.
Walt Disney Co. wasn't part of today's announcements. The Burbank, California-base company began offering over-the-air film rentals in February with MovieBeam Inc. Disney spokeswoman Heidi Trotta declined to comment.
Films bought from CinemaNow on a download-to-own basis must be watched on a computer or other download device, the company said. They can be backed up on a DVD, but can't be played on other devices, Betsy Damus, an outside spokeswoman for the company, said in an e-mailed message.
DVDs Next
Movielink said films may be stored on a computer hard drive to create a permanent archive or burned to a disc in Microsoft Corp.'s Windows Media format for backup or playback on up to two more computers.
Using Windows Media Center software, consumers can stream their copy of the movie to a television set if properly equipped.
The studios are working on technology that would allow customers to create DVDs that can be watched on a television through regular players, Movielink Chief Executive Officer Jim Ramo said today on a conference call. Obstacles include making the coding compatible with the formats used by players, he said. He declined to say how long the transition may take.
Studios may need to complete that work before downloads become a regular practice for consumers, he said.
``It would jump-start the business and move it much quicker to becoming a mass-market service,'' he said.
Films will take about an hour to download over a cable modem, Ramo said.
Prices
Prices for films sold by CinemaNow, including ``Saw II'' and ``Memoirs of a Geisha'' will range from $9.95 to $19.95. New releases on Movielink will sell for as much as $26.99 for titles including ``Bad News Bears'' and ``Cinderella Man,'' according to the company's Web site.
Tomorrow, Movielink will begin offering ``Brokeback Mountain'' from Universal's Focus Features, the same day the Oscar-winning film appears in stores, Ramo said.
General Electric Co.'s Universal Pictures said last week it will sell movies including ``King Kong'' in the U.K. through partner LOVEFiLM. Warner Bros., part of Time Warner Inc., plans to sell downloads of ``Harry Potter and the Goblet of Fire'' in the Netherlands and parts of Belgium.
Most major studios, including Sony Pictures, News Corp.'s Twentieth Century Fox and Warner Bros. previously offered downloads on a rental basis.
The films will be protected by Microsoft's Windows Digital Rights Management software, CinemaNow said in a statement.
CinemaNow counts as its investors Menlo Ventures, Microsoft, Cisco Systems Inc. and Blockbuster Inc.
Santa Monica, California-based Movielink is a joint venture of MGM, Viacom's Inc.'s Paramount unit, Sony, Universal and Warner Bros.
