Blockbuster Video's days are numbered.

[Dave Farber <dave () farber net>]

------ Forwarded Message
From: PAUL JULIEN <p.julien () worldnet att net>
Date: Sun, 10 Nov 2002 22:51:23 -0500
To: dave () farber net
Subject: Blockbuster Video's days are numbered.

Dave:

Blockbuster Video's days are numbered.
This is a huge step forward by the film industry.  It's shocking, really.
It indicates that a lot of reality is beginning to settle in out there about
the importance of e-commerce.  Now the only problem remaining for the film
studios to solve is to get this into your TV set by a low-cost and
convenient method that will be embraced by the home consumer.  This will let
the media conglomerates clear out all the expensive middlemen on the home
side.

The 20 min download time is conveniently just the right length of time to
let you pop and butter the popcorn.


Paul Julien
La Crosse WI


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November 11, 2002
Movie Studios Provide Link for Internet Downloading
By AMY HARMON


Seeking to protect movies from the rampant online piracy that afflicts the
music industry, five major film studios plan to begin offering today rental
feature films that consumers can download from a Web site for a fee.

The service, called Movielink, will be the first to make a substantial
number of popular Hollywood films available legally over the Internet.
Industry executives say it is a significant step toward the long-promised
bounty of video-on-demand, where anyone with an Internet connection can
watch any movie ever made whenever they want.

But the joint venture faces many hurdles, not least of which is that most
people like to watch movies on a television screen from a lounging position,
not sitting up staring at a computer monitor. In addition, since the
Movielink service was announced in August 2001, increasing numbers of cable
and satellite television companies have begun providing video-on-demand
services of their own.

Studio executives struck a cautious tone even as the service prepared to
open its doors this week. "Our expectations are fairly modest," said Yair
Landau, president of Sony Pictures Digital Entertainment, who has championed
the idea for more than a year. "This service does not transform the world,
but it addresses a consumer demand that's out there."

Still, James B. Ramo, the chief executive of Movielink, said there were two
main reasons to believe there is a market for the service. The first is that
the company's research shows that movie trailers are the most-watched video
material on the Web. The second is the popularity of Internet file-trading
software like KaZaA and Morpheus, which people are already using to download
unauthorized copies of movies in large numbers.

"Part of our job is to provide a legitimate outlet for people looking for
video in the pirate community," Mr. Ramo said. "We consider the pirate
services our competition."

Of the 15 million homes and 10 million dormitory rooms with broadband
Internet connections, Mr. Ramo said, roughly one-third are believed to have
residents interested in downloading video material. Travelers are another
potential audience because Movielink customers can download films onto
laptops and watch them on airplanes.

The site, movielink.com, is like a video store with more efficient search
features. Consumers can view trailers of all the movies and create a "wish
list" as they browse, then review the list on subsequent visits. Films cost
$2.99 to $4.99 for 24 hours of viewing time, generally depending on how
recent the film is.

For the studios, the key to the service is security technology supplied by
Microsoft and RealNetworks. They hope that technology will prevent the
movies from being copied and transferred freely over the Internet. It also
allows them to set rules that govern how the movies can be viewed.

Movielink customers have 30 days to watch the films they download, after
which the films will disappear from the hard drives. Once someone clicks
"play" in the software provided by Movielink, that person has 24 hours to
watch the movie. The film cannot be transferred to another device once it is
downloaded to a computer.

About 175 movies will be available at first, including recent hits like "A B
eautiful Mind" and "Harry Potter and the Sorcerer's Stone," as well as older
titles like "Sleepless in Seattle" and "Breakfast at Tiffany's." Movielink
says the films will take 20 minutes to four hours to download, depending on
the speed of the customer's Internet connection. People with slower dial-up
connections are discouraged from using the service.

The catalog is limited, at least for now, to films from the five studios
that are partners in the service: MGM, Paramount Pictures, />Sony Pictures,
Warner Brothers and Universal Pictures. Disney and 20th Century Fox
considered beginning their own service but abandoned those plans after
negative signals from antitrust regulators.

Movielink faces its own antitrust-related problems. A competing service,
Intertainer, shut down in September and filed an antitrust lawsuit against
Movielink and several of the studios. The suit says the studios began
charging Intertainer more to license their movies once plans for Movielink
were under way, in order to drive the company out of business.

"HBO was a middleman that took a huge slice of the pie out of the pay movie
business, and they see us as a budding HBO," said Jonathan Taplin,
Intertainer's chief executive. "They don't want an intermediary, and that's
not good for consumers."

In another lawsuit, Sonicblue, the maker of the ReplayTV digital video
recorder, is also seeking to prove that the studios abused their market
power by freezing Intertainer out of the Internet movie download business.
If the studios are found to have misused their rights as copyright holders,
a Sonicblue lawyer said, they would be barred from enforcing their copyright
infringement claims against Sonicblue, whose Replay machine allows consumers
to record television programs and to skip over advertising.

Studio executives say Intertainer simply spent too much on technology and
did not have enough money to pay for the movies it needed to make the
service a success. Movielink is not expected to make money for several
years.

Company officials emphasized that each studio set its own pricing and
decided which movies to put on the service: "Our whole approach here is to
help drive a new pro-competitive channel of distribution," Mr. Ramo of
Movielink said.

The Justice Department's antitrust division is also investigating the
service. But any regulatory battles are likely to be overshadowed by market
pressures, at least for the next few months. Movielink, which took far
longer than expected to come together, is opening its doors at a time when
cable and satellite companies are aggressively promoting their own
video-on-demand systems.

For the moment, the studios are releasing films on Movielink only after they
have been in video stores for several months, at the same time as they
become available for pay-per-view on cable. But that may change as the
studios experiment with video-on-demand as a substitute for less lucrative
rentals.

Warren Lieberfarb, president of home video for Warner Bros., would like to
sell permanent copies of movies over the Movielink service, something that
would take the place of purchasing DVD's for some consumers.

"The movie industry has faced media revolutions vastly more
opportunistically than our brothers in the music business," Mr. Lieberfarb
said. "We're offering consumers another convenient way to get movies, and we
think the pie is just going to get bigger."



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