Hollywood recasts its download allies

Companies such as Guba and BitTorrent continue to cut deals to distribute movies over the Web.

A correction was made to this story. Read below for details.

For years now, Hollywood has watched the two top suppliers of movie downloads take a beating in the press.

Media critics have blasted CinemaNow and Movielink for selling films that take too long to download, are frequently fuzzy and can cost as much as DVDs. That's why few industry observers are surprised to see Hollywood begin seeking new partners.

The latest studio distribution deal came Tuesday, when Wurld Media, creator of peer-to-peer service Peer Impact, announced that it has begun selling select titles from Twentieth Century Fox Film and Warner Bros. Entertainment.

On the same day, movies from Sony Pictures Entertainment went on sale at video-sharing site Guba. Warner Bros., during the past two months, has struck similar deals with Guba and Wurld Media competitor BitTorrent.

Meanwhile, BusinessWeek has reported that five of the studios that bankrolled Movielink, including Paramount Pictures, Sony and Universal Studios, have begun looking for a buyer of the video-on-demand service.

"The studios aren't going to abandon (Movielink and CinemaNow) completely," said Josh Martin, a digital-media analyst. "But they realize those sites have limited appeal to say the least."

The masses are clamoring for Internet video. Fans of hit TV shows such as "Desperate Housewives" and "Lost" are flocking to Apple Computer's iTunes to download episodes on their iPods. Teenagers and young adults are flooding video-sharing site YouTube, which allows the public to share homemade movies with Internet users from all over the world. Conspicuously missing from the hoopla is feature films.

In theory, movies should be a natural for the Internet. Downloading a movie could save a trip to the video store and be easier to store and transport. But so far, nobody has come up with a business model that appeals to the public, safeguards the studios' content, and surmounts the sizable technological hurdles, analysts say. Representatives of Movielink and CinemaNow were not available for comment.

"The technology isn't there yet to enjoy long-format content," Martin said.

Hollywood executives could wait around until someone figures it out and partner with whoever gets it right. But it appears that they have chosen a different tack. Some of the studios are casting about for different business models and technologies. Consider that Guba is a little known, 20-employee video-sharing company, and BitTorrent was once considered by many in the film industry to be a threat after developing a technology that makes it easy to produce unauthorized movie copies.

"Guba is two things in my mind," said Jim Wuthrich, senior vice president of digital distribution at Warner Bros. Entertainment. "They are an extension of Warner's aggressive approach in this space. We're committed to embracing change and seeing what consumers are interested in, and (understanding) what makes this a compelling product for consumers...Guba and a number of these sites also have very good audiences that are comfortable with Internet video. It's logical for us to go where people are already downloading video."

The size and tech savvy of Guba and BitTorrent's audiences are not lost on either of the companies' CEOs.

"We (have) almost 79 million users," said Ashwin Navin, BitTorrent's president and co-founder. "That's going to be a huge competitive advantage for this business."

Said Guba's CEO, Thomas McInerney: "Guba has more traffic than Movielink and CinemaNow combined. We're already bigger than those players, and it's only the beginning."

 

Correction: This story incorrectly identified the company that requires users to download software before watching movies.

McInerney and Navin are friends, often playing cards together, and their San Francisco-based headquarters are just blocks from each other. Perhaps that's why the two sound so similar when discussing their companies' prospects.

First, BitTorrent is going to download movies more efficiently than Movielink and CinemaNow, Navin says. BitTorrent is a file-sharing system that allows a single file to be broken into small fragments, which are distributed among computers. People then share pieces of the content with each other. This reduces bandwidth costs for content providers and speeds up the downloading process.

In contrast, Movielink and CinemaNow send large digital movie files directly to a user, which often clogs available bandwidth. The companies say they can deliver a film as quickly as 90 minutes. In a comparison of both sites, USA Today reported last month that it took four hours to download the movie "Flightplan" from CinemaNow and three hours and 10 minutes to retrieve "Underworld: Evolution." To be sure, a movie's download time can depend on a person's Internet connection and other variables.

When it comes to ease of use, Guba and BitTorrent will shine, those companies' executives say.

CinemaNow and Movielink require customers to run Internet Explorer in order to make purchases. Movielink also requires a user to download software before they make their first buy.

"Collectively, these sites amount to the most hostile movie procurement option since the video store in Kevin Smith comedy 'Clerks,'" Rob Pegoraro, a columnist at the Washington Post, wrote after reviewing the sites last month.

No software downloads are needed for Guba visitors to obtain a movie. The company, which also requires movie buyers to operate Internet Explorer, is making upgrades that will allow users of Mozilla's Firefox browser to make purchases. Navin said BitTorrent, which has a reputation for being complicated to use, is undergoing a video store overhaul, due to launch this fall, that will make the service more consumer-friendly.

Plenty of challenges await these two new entries to video-on-demand, none the least of which is the approach of Apple.

Multiple news agencies have reported that Apple is in negotiations with the movie studios to offer full-length features at its iTunes store. The talks are reportedly hung up on price. Should a deal be struck, Apple could do to movies what the company has done to music and TV shows. The company has , and more than 35 million videos have been downloaded from iTunes.

An Apple spokeswoman said the company does not comment on rumor and speculation.

Guba and BitTorrent also have yet to prove their sites can protect movies from piracy, or that their Web sites will attract mainstream audiences. Both companies acknowledge that their audiences are predominately technology enthusiasts.

And none of the four companies allows users to download a movie and then burn it to a CD, which could then be played on any DVD player. Sean Carey, executive vice president of digital distribution for Sony Pictures, acknowledges that regardless of who is selling movies online, much work needs to be done to improve the viewer experience.

"We at Sony (are) quite satisfied with the sell-through results at Movielink," Carey said. "This was a baby step for the digital distribution of our product, but we know the consumer proposition needs to get better over time."

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