Hollywood to Sell Movie Downloads

This week promises to be a landmark for the movie industry. In an effort to mitigate piracy of their blockbuster movies and make it easier for the consumer to purchase movies, major Hollywood film studios will begin offering their movies for legal download, for a price.

Movielink, a film site set up between Warner Bros., Sony, MGM, Universal and Twentieth Century Fox, will begin their online offerings with today with King Kong, Memoirs of a Geisha, Good Night and Good Luck, Pride & Prejudice, The 40-Year-Old Virgin, Rent and Harry Potter and the Goblet of Fire. These new titles will cost in the range between $20 and $30.

Tomorrow, Brokeback Mountain will become the first movie to be released simultaneously on DVD and for download. The cost of downloading Brokeback Mountain was not immediately available.

As well as Movielink, CinemaNow will begin offering downloadable movies. CinemaNow has signed on with Sony, MGM and Lion's Gate Film. Lion's Gate, the studio behind Academy Award-winning Crash and horror movies Saw 2 and Hostel, is said to own a large part of CinemaNow, according to Reuters. CinemaNow will also be releasing titles like Fun With Dick and Jane.

The price war between the sites is already apparent. Movielink will charge the $20 to $30 for new movies as mentioned, but slide the price as low as $10 for classic movies. CinemaNow says it will charge between $9.95 and $19.95 for all their movies.

While CinemaNow appears to have the advantage in pricing in the download market, their competitive edge against DVDs may not exist. The recent blockbuster DVD release, King Kong is available through Amazon for $14.96 plus shipping costs, whereas the download of King Kong through Movielink will cost $19.99. Though not always the case, DVD format is currently cheaper or the same price as the download. And, that is not the only advantage DVDs possess over downloads.

Downloading a movie off of the one of either of these sites will not provide the special features that are provided on the DVD. In special cases, certain bonuses will be provided, though on the whole, these special features will be limited to the DVD format. As well, the digital download will not be able to be burned onto a DVD essentially making it non-portable. Users will be able to copy the file for back-up purposes, however. Still, the file downloaded to a user's computer will not easily be played on a user's television screen. Movielink CEO Jim Ramo remained optimistic about the issue, saying "We're seeing, not only a crossroads in consumer demand, but the ... problem of getting the Internet connected to the TV is starting to get solved," according to Reuters.

Still, the CEOs of the two companies are heralding this technology as a huge success. Reuters talked further with Movielink's CEO Jim Ramo, who said "This is an endorsement that digital delivery of high value content has finally arrived." CinemaNow's CEO Curt Marvis maintained the same notion, claiming "one giant step for digital distribution.".

USA Today quoted Mike McGuire of Gartner Research as giving a more balanced opinion. "We're probably three to five years away from any huge market, but early adopters are very interested."

Movies for download has always make movie studios skiddish in the past. The Los Angeles Times reports that "U.S. consumers spent $24.3 billion buying and renting home videos last year, according to Digital Entertainment Group, a trade association." Major studios worry that by placing movies in digital form for sale, piracy will continue to erode at that number, and begin to low growth. With 46% of studio's sales coming from DVDs, many were uncertain of the profitability of the download business. But, with the success of Apple's iTunes, which offers music downloads for sale and downloads of TV shows, studios are starting to turn their attention to the downloadable realm. As CinemaNow's CEO Curt Marvis said to Los Angeles Times, " 'in a perfect world' the studios would introduce an offer that satisfied all consumers. 'Unfortunately, it doesn't work that way,' he said. 'They need to take a first step to get into digital distribution for a variety of reasons. That's what this is, a first step.'"

Movielink is only available in the United States. CinemaNow is available in the United States and Canada. AOL will launch a British version on April 10th. Another UK site, Wippit began offering independent movies for download in February.

[Additional Sources: Reuters, Los Angeles Times, USA Today, BBC]