October 7, 2002 10:18 AM PDT

CinemaNow nabs Universal Studios deal

Online film distributor CinemaNow said Monday it will offer a select library of popular films from Universal Studios, its latest licensing deal with a major studio.

The Marina del Rey, Calif.-based company, which is majority-owned by Lions Gate Entertainment, said it agreed to a four-month trial with Universal Studios Pay-Per-View, a division of Vivendi Universal, to show first-run films such as "Big Fat Liar" and "The Scorpion King." The new-release movies will be available online in November, at the same time they can be viewed on pay-per-view satellite or cable.

The films, as well as a library of older Universal titles including "Psycho," will be accessible via download or stream over the Internet.

The deal is only the latest for CinemaNow. Last month, it signed a licensing agreement with Warner Bros., its first major-studio deal. In addition, it has tested online distribution for MGM in the past.

Still, video-on-demand ventures have faced an uphill battle in persuading major movie studios to license content for Web audiences. Despite backing an as-yet-unavailable service, the top five major studios have been reluctant to set up rental businesses online for lack of economic models and for fear of Internet piracy, which has run rampant in peer-to-peer services such as Morpheus.

After nearly two years in the making, Santa Monica, Calif.-based Movielink--which is backed by the five major studios including Sony Pictures Digital Entertainment and Vivendi Universal's Universal Pictures--is expected to debut near the holidays.

But Hollywood's hesitancy has drawn the ire of online upstarts and scrutiny from federal investigators. The Justice Department's antitrust division has been looking at any anti-competitive behavior on the part of the major studios in the video-on-demand ventures. Also, Intertainer, a rival video-on-demand service, filed an antitrust lawsuit last month against three major Hollywood studios, including Vivendi Universal. The suit alleges that the studios engaged in a "group boycott" of licensing their movies to Intertainer to buy time in launching their rival Movielink joint venture.

Intertainer, which like CinemaNow is funded in part by Microsoft, has a multiyear deal with Universal Studios Pay-Per-View, which licensed its library for distribution over Intertainer's video-on-demand cable service. In August, the company expanded its agreement with the studio to include distribution over the Internet.

CinemaNow, which offers about 2,500 independent films, is catching up. The service offers pay-for-view movies available in Windows Media 9 Series formats that can be downloaded and watched in Microsoft's player, which includes secure digital video delivery. New release movies typically sell for $3.99 and older films for $2.99.

"For the past three years we have been perfecting our business, creating a simplified interface for streaming and downloading content, while providing a technology that can securely deliver any piece of content on-demand in a financially viable manner," CinemaNow CEO Curt Marvis said in a statement.

 

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