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Hollywood goes online

By Reuters
Los Angeles, 12 Nov 2002

Five top Hollywood studios opened online box office Movielink this week in their first, tentative step to sell blockbuster films on the Web after years of fretting over the copyright piracy now threatening the music business.

For years the studios have grappled with exactly how and when to sell movies on demand via the Internet in what they see as a lucrative, new market for their libraries of movies.

Movies on DVD have been a major contributor to studio profits since their launch five years ago, ringing up total sales of $4.6 billion in 2001. Industry watchers believe Web-based video on demand can be even bigger.

But even Movielink chief Jim Ramo says those kinds of sales are far on the horizon. Movielink`s aim is to prove a market exists, test prices, learn about users and, importantly, send the pirates sailing into the Internet sunset, he says.

"We think we are early enough in the cultural usage of movies on the Web that we are able to make the pirates deviants."

Movielink lifts the curtain on its service with the backing of Warner Bros, Paramount Pictures, Universal Studios, Sony Pictures Entertainment and Metro-Goldwyn-Mayer.

At its launch, Movielink is offering 170 titles from Oscar winners like 2001`s "A Beautiful Mind" to the classic "Breakfast at Tiffany`s". In between are action films such as "Air Force One", kids movies like "Harry Potter and the Sorcerer`s Stone" and comedies such as "Men In Black".

Prices will range from $1.99 for older titles to about $4.95 for recent releases, and the service comes with VCR-like functions such as pause, rewind and fast-forward.

The movies are downloaded onto a computer hard drive, where they reside for 30 days before being deleted. Movielink users must have high-speed Web connections, otherwise the time to download is prohibitive, Ramo said.

Once a film is started, viewers have 24 hours to watch the full movie before it is deleted, which is among the built-in protections to keep users from posting films on file-sharing Web sites where they can be swapped for free.

The movie studios want to ensure their products do not get the same treatment as CDs.

Ramo said market tests of one major market could be travellers who download movies onto a laptop computer to watch while on the road or to set up for their kids in the backseats of cars.

College students with high-speed Internet connections, too, are expected to be a core, early audience.

Ramo said more than 25 million homes in the US now have broadband connections, representing a sizable potential market.

Movielink competes with CinemaNow, the only other movie download site to license films from Hollywood studios. It is backed by film company Lions Gate Entertainment, Microsoft and Blockbuster.

CinemaNow chief Curt Marvis said his site gets about 50 000 users a day, or 1.5 million a month, but most are downloading movie trailers and other free clips. CinemaNow converts about 1% of those people to paying customers, he said.

Marvis is not worried about competition, especially this early in the evolution of movies on the Web. "One reason we are excited about Movielink is we think they have great potential to increase visibility" of watching movies online, he said.

Ramo declined to comment on projected profits or on the amount of funding the studios are putting into Movielink.

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Reuters News Service

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