CinemaNow Signs Fox to Online Movie Output Deal
April 4th, 2003
Online movie service CinemaNow on Wednesday said it signed Twentieth Century Fox, whose movies include "Daredevil," to a distribution pact, adding one more major studio to its list of content providers.
The move should boost CinemaNow's competitive stance against Movielink, the other major online film service, which is backed by five major studios.
CinemaNow, based in the Los Angeles suburb of Marina Del Ray, is majority-owned by independent film company Lions Gate Entertainment Corp. (Toronto: LGF.TO - news) with investment partners that include Microsoft Corp. ( MSFT - news) and Blockbuster Inc. (NYSE: BBI - news). It had signed Universal Pictures, Warner Bros. and Metro-Goldwyn-Mayer to previous distribution pacts.
In a statement, CinemaNow Chief Executive Curt Marvis said the deal was of "tremendous significance" to the company due to Fox's stature as one of the industry's major studios.
Fox, which is owned by the Fox Entertainment Group (NYSE: FOX - news) unit of News Corp. Ltd. (NCP.AX) (NYSE: NWS - news), had yet to affiliate with either movie download site after ending its own bid to start a similar service with The Walt Disney Co. (NYSE: DIS - news)
The major studios have moved into the download arena cautiously fearing digital copies of movies will be pirated and shared with millions of potential fans around the world, which would cannibalize theater ticket, video, DVD and other sales.
As digital encryption technology has improved, however, the studios increasingly have been embracing it as a new revenue source and a way to beat pirates by offering a cheap, reliable product as an alternative to free but sometimes poor quality movies offered by film swap sites.
"We expect our partnership to provide a legitimate alternative to combat the growing problem of online piracy," said Peter Levinsohn, executive vice president of worldwide pay television at Fox Entertainment.
Fox said two key factors affected its decision: CinemaNow's ability to protect movies and its ability to market them on the Internet. CinemaNow uses its own digital rights management and encryption software called PatchBay.
Movielink is backed by Warner Bros., a unit of AOL Time Warner Inc.'s (NYSE: AOL - news) Warner Bros, Viacom Inc.'s (NYSE: VIAB - news) (NYSE: VIA - news) Paramount Pictures, Vivendi Universal's (NYSE: V - news) Universal Studios, Sony Corp.'s (6758.T) Sony Pictures Entertainment and Metro-Goldwyn-Mayer Inc. (NYSE: MGM - news)
(Source: Variety)
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