Digital Envoy, with its NetAcuity technology, says it can block audiences with 99 percent accuracy, helping companies such as CinemaNow make good on its film distribution promises.
"One of the main things that's holding back movie studios from going online is this territorial management issue," said Bruce Eisen, executive vice president of CinemaNow.
The partnership underscores the ongoing struggle between Hollywood and the Internet's wide audience. Movie studios have been apprehensive about embracing the Net, fearing that copyrighted materials could be pirated and that territorially-based distribution rights could be too easily broken.
Last year, the motion picture industry successfully shuttered iCraveTV, a small, Canadian Web company that broadcast TV programming over the Internet without first securing permission from the studios. The industry also cracked down on RecordTV, a company that records TV shows and plays them back on the Web, saying that the activity amounted to a copyright violation.
In August, Gaijin a Go Go Cafe and Zero One Design, two tiny outfits that streamed Japanese commercials featuring big Hollywood stars, were warned about distributing creative work outside the approved distribution circuit.
CinemaNow, which launched its video-on-demand service in November, wanted to avoid the kind of trouble that iCraveTV and RecordTV attracted. The company sought help from Digital Envoy when a Net distribution of the science fiction thriller, "Prototype," drew the wrath of Hollywood lawyers.
Turns out CinemaNow had inadvertently violated conditions of the licensing agreement because it could not, with near 100 percent accuracy, block audiences from outside of the United States, where it did not have permission to distribute.
With NetAcuity, Digital Envoy says it can detect the location of an estimated 4.2 billion Internet addresses.
There may be some loopholes, however.
The 26 million people that use America Online, the Internet service provider from AOL Time Warner, all have IP (Internet Protocol) addresses in Virginia, where AOL is based. For example, a person living in France using AOL services is detected as someone living in the United States. Digital Envoy also can't detect the location of consumers who place filters on their computers that make them anonymous. Such filters conceal personal identifying information such as age, sex and income; they also hide IP addresses.
In addition, privacy advocates have been looking at the ability of companies to trace a Net user to a physical location. As Web surfers become increasingly worried that the Internet will open dossiers to anyone for a price, concerns have been raised that technology capable of revealing IP addresses could in turn make street addresses and other personal information available.
Still, Digital Envoy's technology is accurate enough to satisfy Hollywood studios that had been apprehensive about distributing movies online, Eisen said.
CinemaNow, majority-owned by Lions Gate Entertainment, streams about 200 full-length feature films online through its video-on-demand service. Microsoft's Windows Media Player 7 and digital rights management technology prevent piracy.
CinemaNow has the digital rights to distribute movies from Lions Gate Entertainment, Trimark Pictures, Allied Artists, Tai Seng Home Video and Salvation Films.