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Top movie studios expand 'download to own' services to America


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Retired Tech

Retired Tech

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Six major studios are starting U.S.-based Internet services to sell movies that buyers can download and keep for watching at any time.

The move comes hard on the heels of similar efforts they recently announced in Europe and shows how the film industry is struggling to avoid the problems it faces from piracy.

The only downloads the studios have offered in the United States have been online rentals, which can be watched only for a 24-hour period, an idea that has not caught on. But the high prices and technological limits of the new "download to own" sites suggest that they, too, may not be an instant hit.

New movies will cost about $20 to $30 to download; older titles will cost as little as $10. The downloads will be available on the same day that the DVD is released - quicker than rentals, which are put online about 45 days later and cost $2 to $5.

The studios hope more people will want to own digital copies of movies, just as more people pay to download songs than sign up for online music subscription services with a monthly fee.

Download sales have been discussed for several years in Hollywood, but the studios have been spurred to action by the success of television programs sold through Apple Computer's iTunes Music Store.

"The Internet has really come of age now, and it is a viable method of distributing our content," said Rick Finkelstein, the president of Universal Pictures, a unit of NBC Universal, noting that sales through iTunes have been much greater than he expected.

Moreover, Universal's research showed that most of those downloads were watched on computer screens, not video iPods, indicating that people are willing to watch video on their PCs.

In Europe, the "download to own" services are LoveFilm and In2Movies, both of which are starting small, as are those in the United States, Movielink and CinemaNow.

Nearly 300 films are on sale to buyers only within the United States through Movielink, which has been largely an online rental site and is owned by Warner Brothers, a unit of Time Warner; Sony Pictures; Universal; MGM; and Paramount, a unit of Viacom. Movielink offers films from its owners and from Twentieth Century Fox, owned by News Corp.

CinemaNow is selling 75 movies from Sony, MGM and Lions Gate, which owns a large stake in CinemaNow. Curt Marvis, chief executive of CinemaNow, said he was talking to other studios about selling downloads.

Apple, Amazon.com and other online retailers are also busily trying to cut deals with Hollywood to sell downloads, according to several studio executives. In general, the studios want to make downloads available on largely the same terms, in as many places as possible.

"We are talking to a lot of people, and hopefully our movies will be on many other sites shortly," Finkelstein said.

For now, a movie will need about one gigabyte of hard-drive space and will take an hour or two to download using a high-speed Internet connection.

The movies cannot be copied to Apple's video iPod or the much less popular hand-held video players that use software from Microsoft. The studios expect to permit downloads to portable devices later this year.

It is difficult but not impossible to watch the downloaded movies on a television. Some computers, like those using Microsoft's Windows Media Center, are designed to be connected to a television in the living room. Jim Ramo, Movielink's chief executive, said that fixing the problem of connecting the TV set to the Internet "is starting to happen this year."

The downloads do not include bonus features like deleted scenes and filmmaker interviews that often accompany DVDs. Industry executives say these limitations will dampen the appeal of downloads, particularly because the services must compete with chain stores and Web retailers that often discount DVDs to below their wholesale cost.

For example, "Memoirs of a Geisha," from Sony, will cost $19.99 to download from CinemaNow and $25.99 from Movielink. As a DVD, it retails at $16.87 at Wal-Mart. "King Kong," from Universal, which will cost $19.99 from both download services, is being sold on DVD for $14.96 by Amazon.com.

"They are giving the consumer less and charging more for it," said Warren Lieberfarb, the former president of Warner Home Video and now an entertainment technology consultant. "To me this really stacks the deck against mass consumer adoption."

"The studios are caught between a rock and a hard place," Lieberfarb said. "If they don't make movies available electronically, piracy will get them. But they also have to take care of their brick- and-mortar customers." If the chain stores became angered by inexpensive downloads, he said, they might pull back from their heavy promotion of DVDs.

Benjamin Feingold, the president of Sony Pictures Home Entertainment, said Sony's policy was to charge the same wholesale price for DVDs and downloads. "We have always had a level playing field for retailers," Feingold said. Given the way chain stores use DVDs as loss leaders, he added, much of the market for downloads may turn out to be older titles that are difficult to find.
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