Download Movies Legally, for a Price

First came legal music downloads. Then, last fall, Apple's iTunes Music Store unleashed download-to-own television shows for portable devices. Now, the two leading Web-based movie services--Movielink and CinemaNow--offer digital movies for purchase.

Both Movielink and CinemaNow launched the new services earlier this week. Previously, both services focused on online rentals, letting customers download a movie for a limited rental period. The movies available ranged from catalog titles to recent releases.

The services weren't competing with what you could buy at your local WalMart or Best Buy, but rather with your cable TV service: the movies available were in what Hollywood has come to consider the video-on-demand category, as opposed to home video releases (which include DVD and VHS releases).

Movielink, owned by five of the eight major studios, will features titles from MGM, Paramount Pictures, Sony Pictures, Twentieth Century Fox, Universal Pictures, and Warner Brothers (among the hits: Academy Award-winning Walk the Line, King Kong, and Harry Potter and the Goblet of Fire.)

CinemaNow, whose major investors include Lions Gate Entertainment, Microsoft, Cisco Systems, and Blockbuster, will initially feature only movies from the Sony, MGM, and Lions Gate libraries.

Jim Ramo, Movielink's CEO, notes that the older model of online movie distribution envisioned online movies being delivered 30 to 60 days after the home video release. "The studios decided to move the window up; so we'll have Brokeback Mountain available at the same time as the DVD. This shift indicates a more fundamental change in importance the movie studios are assigning to legal downloads," he said. CinemaNow has similar plans to launch films for download simultaneously with the DVD release.

With the new services, studios are trying to cook up new ways to distribute their content--and make money doing so.

Ramo credits a convergence of factors for making the time right for these types of digital movie downloads. More users have broadband connections, he says, and "there's increasing confidence on the part of the studios that the Internet is a secure delivery platform for content." The success of Apple's iTunes Music Store has helped, too, he adds: "In the last year, there has been a significant growth in consumer downloading of video of all types, and this has been driven by Apple's iPod. There's a broader awareness of downloading video, and now there's a real opportunity to fill that demand."

The advantages of digital downloads are, according to Ramos, "the convenience and the functionality. You can imagine someone having a laptop with 30 movies stored in it. You can move the files around pretty easily, and you can store [the laptop] pretty easily, too. We're really focused on the digital file and the digital delivery, and to make sure we have a really flexible delivery, so you can get what you want when you want it."

Unlike its download-to-rent model, Movielink's download-to-own service will allow you to play a 1GB file--described by Ramo as "digital cable" quality--on up to three PCs, including a Windows XP Media Center Edition PC that streams content to an Xbox or other Media Center Extender.

You are even allowed to burn a back-up copy of the file to DVD or to another hard drive. In order to play that back-up copy or use the file on other PCs, you'll need an Internet connection. This will allow you to hop over to the Movielink Web site to enter a password and PIN number to authorize any of those devices to play the file. (CinemaNow will be able to play films on just one computer.)

At both sites, movies will be priced comparably with DVDs: $20 to $30 for new flicks, and $10 to $20 for catalog titles at Movielink; and $10 to $20 for catalog and new titles at CinemaNow. Movielink is offering 300 films at launch, while CinemaNow has about 85 titles.

Though supplying lower-resolution movie downloads for use on portable devices and offering price breaks for buying both the DVD and the electronic download may seem like natural developments, neither company has plans for these options. "We expect that in the future we will open up delivery to Microsoft Portable Media Center devices, but we are not announcing that today," says Movielink's Ramo.

Competition in the video download space is heating up as Hollywood explores its options. "There is nothing to prevent studios from selling to anyone they want to," observes Ramo.

The next logical step is to bring digital downloads to consumers' favorite Web storefronts. Warner Home Video is launching just such a service in Belgium, Luxembourg, and the Netherlands; the company announced today a deal with Free Record Shop, a popular entertainment chain, to offer digital versions of about 100 Warner Brothers films for sale alongside DVDs. Ruud Lamers, managing director of Warner Home Video Benelux, says, "We want to make sure that when we are fighting illegal downloading, we have a legitimate alternative out there." This service is available only in these three countries, however.

As with CinemaNow, the movies will be available for playback only on the device you downloaded them to, and they are protected by Windows Media 10 digital rights management. Lamers also describes these movies as DVD-quality, and expects a typical user to need about 2 hours to download a film over a broadband connection.

Though portable devices aren't supported yet, Lamers says that Warner is working with Free Record Shop "to explore this in the future. There are so many portable devices, though, and each needs its own technical specifications, and that's the challenge we face." "Our goal," he adds, "is to make our content available to as many possible consumers through as many ways as possible."