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UPDATE: MGM Inks Two VOD Pacts

22 Feb, 2002 By: Joan Villa

MGM Home Entertainment has joined with CinemaNow in a 30-day test of Internet streaming and downloading on two movies, What's the Worst That Could Happen? and The Man In the Iron Mask.

The test will track consumer response at two price points -- $3.99 and $4.99 for What's the Worst That Could Happen? -- at the same time that the title is released to pay-per-view. The Martin Lawrence comedy has been out on video since Jan. 1. The second film, from MGM's library, will be priced at $2.99 with a $1 discount if ordered with the new release. The titles will be available for 30 days.

According to MGM Home Entertainment Group president and COO David Bishop, the experiment allows the studio to explore how consumers are using the Internet with an eye toward building new audiences for the company's new and classic films.

"Our intention is to begin to understand the consumer dynamics around VOD," explained Blake Thomas, EVP, worldwide marketing. "Our feeling is it's such a new industry and a new way for consumers to get movies at home, that we don't know anything about how they look at it, how it fits into their lives, how many times a week they would use it, how much they would pay…all the pieces of information you'd want to know."

Bruce Eisen, EVP at CinemaNow, which is majority-owned by Lions Gate Home Entertainment, said the deal is the first time a major studio has allowed its content to be downloaded. Customers download the title, which takes about an hour with a cable modem or DSL connection, and then must be connected to the Internet to receive a "license" that unlocks the film's encryption and allows multiple viewings in a 24-hour period, he explained.

"With a 56k dial-up connection," he added, the downloading takes "significantly longer."

However, MGM restricted streaming access to 300k and 700k connections, effectively blocking users with dial-up connections from utilizing the streaming option, Eisen said.

From past experience, Eisen predicts purchasers of the two films will number "in the thousands, not hundreds of thousands."

"Today this doesn't come close to the kind of numbers we're all accustomed to in traditional media but it's starting," he noted. "We don't need a million people for this to be a raging success."

At the same time, MGM has also signed a one-year deal to stream its films on the Intertainer VOD service. The agreement brings MGM's catalog and recent hits like Legally Blonde and Heartbreakers to Intertainer's broadband customer base in the top 60 U.S. markets at the same time as PPV, according to Intertainer spokeswoman Louise Rasho.

Intertainer already streams television programming including A&E and The Discovery Channel productions to broadband users for a basic fee of $7.99 per month. While new movies typically cost $3.99 per use, MGM will charge $4.50 for its new films, Rasho said. Catalog titles are generally $1.99-$2.99 per view, Rasho said.

Intertainer provides films from Warner Bros. and DreamWorks SKG on both broadband and in some 350,000 digital cable households. MGM will only be available on broadband; while titles from Universal and Artisan are only provided on digital cable, she added.

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