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VOD Providers Have Rental In Their Crosshairs

17 Apr, 2002 By: Bruce Apar

Hollywood's growing dismay over PC movie piracy is providing ammunition for the small but bullish video-on-demand (VOD) community to try shooting down the two-month home video window as no longer in the studios' best interests, VOD providers told an industry audience of about 140 today at the opening session of the Kagan VOD Summit in New York City.

The two-day conference is dubbed "an exploration of the economics and strategies in the new television frontier."

The VOD companies' general argument focuses on reducing digital piracy. Their rationale is the closer to DVD release that movie studios release films to digital cable, broadband or other forms of on-demand delivery, the less likely that PC users will be inclined to "rip" a legitimate DVD, copy it to a hard drive and make it freely available on the Internet.

These days, using pervasive software programs like KaZaa via services like Morpheus and MusicCity, virtually anyone sitting at a desktop can figure out how to post feature films online. One panelist told of walking in on his 14-year-old daughter and friends to discover them watching a Chinese version of Lord of the Rings they had downloaded to the PC.

With day-and-date DVD and VOD release, say some VOD proponents, the studios can use digital delivery to more quickly satisfy demand and put money in their pockets instead of being pickpocketed by unauthorized distribution that threatens to spin out of control.

Jonathan Taplin, CEO of cable VOD provider Intertainer, took square aim at Blockbuster for its ability to buy a DVD for $12 and rent it repeatedly without the studio "sharing in the upside." He characterized a Wall Street Journal article published a couple of months ago as "Warren Lieberfarb of Warner Home Video [saying] there is definitely a war coming between the movie studios and Blockbuster."

With VOD, Taplin pointed out, a studio like Warner would share each time the movie is viewed, citing $2.10 as revenue remitted to the rights holder per transaction. "It allows Warner to put its whole library on our system and recreate the Blockbuster store. If they push the VOD window day-and-date with Blockbuster, it's inevitable they will get legitimate revenues quickly.

"The digital piracy," Taplin continued, "is coming from people either cracking DVDs or stealing from the studio lots, not from camcorders in movie theaters."

Attending the conference was Michael Lightbourne, executive VP of Rentrak, along with chief information officer Amir Yazdani. Lightbourne noted that Rentrak's "core competencies in information gathering and data processing work as well in this area as they do in home video."

So many distribution channels -- phone companies, cable operators, satellite services -- are emerging for digital content that several years from now, he said, Rentrak sees a viable business in aggregating consumer data as a service to content providers.

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