CinemaNow, Technicolor open download business to all retailers

Partnership offers content, digital backend

By Paul Sweeting -- Video Business, 4/15/2008

APRIL 15 | Movie downloader CinemaNow and Technicolor are partnering to provide content and technology solutions to enable other retailers to get into the business of digital delivery.

CinemaNow will make its content available to online retailers, and Technicolor will provide the “supply chain” to handle encoding, digital rights management, formatting for multiple devices and screens, and other services according to the retailers’ specifications. The partnership aims to let retailers get into the business of electronic delivery with content provided by CinemaNow and without having to invest their own capital in encoding and storage.

CinemaNow currently has international rights to a large amount of independent and catalog product and is “in the process of clearing those rights” with the major studios, the company said.

“Today, if a retailer wants to sell movies online, they have to get those movies encoded themselves,” said Scott Dougall, general manager of Technicolor Electronic Delivery Services. “They have to get the rights, they have to license the DRM. They have to store the content. There are huge costs associated with that that make it very difficult for the retailer to make money. We want to be that supply chain, so we can offer retailers a pure variable cost model.”

“We don’t charge retailers upfront for encoding or storage,” the Technicolor executive said. "So there’s no upfront cost to them to get into the digital business. We charge them by the download, so it’s a pure variable cost on their P&L.”

At the same time, Technicolor will provide the backend support for CinemaNow’s deals with device makers wherein CinemaNow is the “embedded” movie storefront.

CinemaNow has deals to “embed” its service in Samsung’s P2 portable media player, Archos, Dish Network and Hewlett-Packard and is working on others. It also has a deal with Sonic Solutions to be the embedded movie storefront for DVD burners using Sonic’s CSS-enabled download and burn system.

CinemaNow is “very bullish” on the comes-with-content model for consumer devices, company president and chief operating officer David Cook said. He wants CinemaNow to be the embedded storefront in as many devices as possible.

“Device makers are very keen to have a single embedded solution that will work across multiple SKUs and in multiple markets,” he said.

Another area of the partnership’s focus will be supporting “second session” copies, such as digital movie files embedded on packaged DVDs.

“Basically, when you buy a DVD now that has a second session, or an e-copy of the movie, you get a Windows Media file that a lot of consumers don’t know what to do with,” Cook said. “ Now, all of that can be integrated into our system, so if you buy a DVD with a second session, you’ll be able to easily get that copy onto any device we support, like the Archos device or the Samsung P2.”

Under the partnership, CinemaNow and Technicolor also will work on adding high-definition movies to CinemaNow’s library. CinemaNow also plans to expand internationally, leveraging Technicolor’s digital supply chain services, including preparing and hosting movies with subtitles and foreign-language audio tracks.

“Basically, we’re leveraging their digital supply chain to make it possible for us to add [high-def], to support multiple codecs, multiple DRMs, multiple language tracks and to have a single, embedded storefront for international markets as well as the U.S.,” Cook said. “That was very important to a lot of the device makers we’re talking to. They wanted a single storefront that they could take into international markets, and working with Technicolor really gives us the ability to have a global supply chain to support that.”

For Technicolor, “the goal is to build a nice, subtle transition from DVDs to digital delivery,” Dougall said. “We’re one of the largest DVD replicators in the world, but ultimately, that business is going to sunset. We want to be in a position to provide the next generation of supply chains when that happens.”