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Roxio CinemaNow on 1 Million Devices

By : Erik Gruenwedel | Posted: 05 Feb 2010

Sonic Solutions' rollout of Roxio CinemaNow took a major step forward when the Novato, Calif.-based digital media company said it increased the install base of the movie download software to 1 million consumer electronics devices in the third quarter (ended Dec. 31), up from 300,000 units in September.

Roxio CinemaNow software is embedded in a number of consumer electronics products, PCs, connected TVs, set-top DVRs, Blu-ray Disc players, smartphones and media devices. The software enables third-party services to allow consumers to rent and purchase Hollywood movies from the Internet and play them on their favorite devices.

The technology also powers digital entertainment distribution for related physical and online platforms branded by Best Buy, Blockbuster and most recently a movie download service via DivX-powered televisions.

“It is clear consumers resonate with the Blockbuster brand,” Sonic Solutions CEO Dave Habiger, said in a Feb. 4 call with investors. “We were blown away by the December numbers, and January’s results are even stronger.”

In addition, Best Buy, which is rolling out a digital content store, apparently intends to include CinemaNow software in every Web-enabled CE device it sells going forward to better facilitate access to the online store, Habiger said.

This would include the No. 1 CE retailer’s connected TVs, portable media players, Blu-ray players, PCs, set-top boxes and mobile phones from every manufacturer.

Habiger said Sonic and Best Buy executives “huddled” with Hollywood studios at the Consumer Electronics Show in January to discuss their digital content distribution “roadmap” envisioned this year.

“We were very gratified by the response we received,” he said, adding that further information about the digital store would come from Best Buy.

Best Buy spokesperson Scott Morris confirmed the discussions, saying a movie download service would be incorporated in the content store, which is slated to launch in the second quarter.

“Certainly, it will be movie titles, as Roxio CinemaNow has relationships with the studios, and we see our Napster [music download] service fitting in as well,” Morris said.

Sonic said it would include CinemaNow into 3 million CE devices by June, and 30 million units by 2011. Roxio, which markets an array of digital-media software, in addition to CinemaNow, increased market share and revenue 48% and 57%, respectively, in 2009, according to The NPD Group.

“CinemaNow is tracking at or better than expectations,” William Blair & Co. analyst Ralph Schackart wrote in a Feb. 5 note to clients.

The analyst cautioned, however, that while the “worldwide $45 billion” DVD market is in the early phases of a shift toward digital distribution, Sonic investors would need to see further announcements to “maintain enthusiasm” for the electronic platform.

Indeed, for the quarter, Sonic reported a net loss of $344,000, compared to net income of $830,000 during the previous-year period. Revenue declined less than 1% to $26.39 million, from $26.45 million last year.


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