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VOD Still Waiting for More Studio Support

22 Sep, 2005 By: Jessica Wolf

Video-on-demand providers still are waiting for studios to fully tap their services' potential.

Speakers, including executives from Movielink and CinemaNow, hashed out some of the issues facing digital entertainment delivery at this week's Digital Hollywood conference in Santa Monica, Calif.

Panelists were abuzz with the news that Viacom is purchasing niche content provider iFilm for roughly $50 million, according to a report broken at the confab by Rafat Ali, editor and publisher of Paidcontent.org.

Official announcements from the involved companies should come in about a week, Ali said. The deal could be an indicator of things to come, panelists said.

“[Studios] are following where their audience is going,” said Hilmi Ozguc, CEO of Maven Networks, a broadband software supplier.

Meanwhile, the two major players in the online VOD space — Movielink and CinemaNow — are still waiting to get more and better content online. They'd love to have a 30,000-title strong library like Netflix, execs from both companies agreed.

Studios haven't quite wrapped their heads around that yet, but the virtual rumble is starting, both said.

“Over the past two years, very little has changed, but I think that is going to shift dramatically in the next few months and going into 2006,” said Curt Marvis, CEO of CinemaNow.

Future growth of Web-based VOD may very well be in download-to-own, panelists said.

“The biggest development we see is the growing interest in the sellthrough model,” said Alan Citron, SVP of marketing for Movielink.

Lower cost-to-goods would allow providers to offer sellthrough VOD at near wholesale costs, speakers said. And there are virtual storage options for content like this, said Josh Goldman, CEO of Akimbo, VOD supplier of niche content. Instead of burning the content to a CD or storing the entire downloaded film on a hard disk, there are services that allow the user to retain the license to the content on their own system, while the actual movie or video content is stored on a central server. The license would allow access to the movie at the consumer's whim but remove the storage option or the cost of buying blank media, he said.

Lots of things have to fall into place before a sellthrough market will emerge for VOD content, panelists said, not the least of which is the digital rights management issue. What's primarily available now is a download with DRM that only allows users to view the content on whatever device they downloaded it to. But that's not the way consumers want to interact with downloaded content, Marvis said. He pointed to the success of iTunes, which shows how importart portability is.

David Bishop, president of worldwide brand integration for Sony Pictures Entertainment, speaking on a different panel, said VOD and internet delivery can service a fragmented mass market.Search is going to be an important factor to connect those fragmented consumers to available product, attendees said. Executives from Yahoo and Google speaking at the conference already are hammering out beta tests and search offerings that will help users find content.

“The beauty technology offers, as opposed to all the scary things it conjures, is ubiquitous access to content,” CinemaNow's Marvis said. “Put aside the thieves, and think about the vast amount of music consumers can legally get their hands on now. The same will hold true for filmed content.”

Content holders aren't trying to kill technology, Sony's Bishop said. “On the contrary,” he said. “We're chasing it. We also still believe this business can be managed by windows.”

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