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Sonic Solutions Acquires CinemaNow

By Erik Gruenwedel | Posted: 19 Nov 2008

Why partner when you can be the owner?

Sonic Solutions Nov. 19 said it had entered into a definitive agreement to acquire movie download pioneer and business partner CinemaNow, including its 6,000 catalog of major studio movies, TV shows and music videos.

The $3 million cash acquisition includes assimilation of about 30 CinemaNow employees and continued operations of its office in Marina Del Rey, Calif. Sonic expects to charge $1.5 million in expenses related to the acquisition.

Novato, Calif.-based Sonic said it would incorporate CinemaNow into a newly created premium content group headed by Mark Ely, EVP of strategy at Sonic.

The group’s strategy is to market the CinemaNow storefront to third-party Web sites, PCs and consumer electronics devices.

“With the addition of CinemaNow, we are now putting emphasis on the distribution component of our mission statement,” Dave Habiger, president and CEO of Sonic, said in a call with investors.

Habiger said CinemaNow had been generating about $1 million in quarterly revenue and had not been profitable. He said CinemaNow expects to double the service’s number of movies and TV content in 2009.

Habiger said he hoped the synergy with CinemaNow would emulate for movies what Apple’s iTunes Store has had delivering digital music.

“We’re trying to take a page out of Apple’s playbook,” he said.

Digital content distribution has evolved recently with online DVD rental service Netflix aggressively courting CE manufacturers for its burgeoning streaming service, such as the new Xbox 360 Experience that went live Nov. 19.

“With broadband-connected consumer electronics hitting the market in greater numbers, there is a growing need for a service that gives consumers one-click access to premium content on any device in the digital home,” said David Cook, president and COO of CinemaNow.

The two companies previously collaborated on Sonic’s Qflix download-to-burn DVD drive business, including marketing its content and technology to CE and PC manufacturers such as Dell, Intel, TiVo, Macrovision, Samsung, DivX, Pioneer and Plextor, among others.

Sonic software is already a mainstay in studio DVD and Blu-ray Disc production, and its Roxio-branded technology is found in set-top boxes, in-car entertainment systems and other portable media players.

Founded in 1999, CinemaNow has digital licenses with more than 250 content providers, including EMI, HDNet, IFC, Lionsgate, MGM, Miramax, NBC Universal, Paramount Pictures, Sony Pictures, Sundance Channel, 20th Century Fox, Vivendi Entertainment, Walt Disney Co. and Warner Bros.

In addition to download service Movielink (owned by Blockbuster Inc.), CinemaNow was the first service to offer download-to-burn content playable on a standard DVD.

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