October 30, 2002 10:56 AM PST

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Video-on-demand site Movielink said Wednesday that it will use technology from both RealNetworks and Microsoft to run its imminent service for Internet movie rentals.

In two separate announcements, the Santa Monica, Calif.-based company said it chose Microsoft Windows Media and RealNetworks technology for its service, which is expected to launch by the end of the year. The deals cover video-streaming encoding, decoding and media player technology, as well as digital rights management (DRM) technology to protect Movielink's library of films from Net piracy.

Financial terms of the deals were not released.

Movielink CEO Jim Ramos said that in forging the two partnerships, the technology puzzle is nearly complete as the service gets ready to launch. However, the company has yet to announce a technological partner, such as Akamai Technologies, to shuttle large packets of video over the Internet. Ramos said Movielink chose its digital-video delivery partners with both Web surfers and the studios in mind.

"We wanted as low a hurdle as possible for consumers to be able to get movies through the most widely distributed players, Microsoft and RealNetworks, and the most secure digital rights management technologies," Ramos said.

Movielink, which is backed by Metro-Goldwyn-Mayer, Paramount Pictures, Sony Pictures Entertainment, Universal and Warner Bros., has been two years in the making, during which time many other Internet film distributors have come and gone. As the service gets ready to debut, it has signed several technology deals to prepare the venture, including those with RealNetworks and Microsoft. In September, it inked a three-year deal with IBM for film storage and security.

Under Wednesday's deals, Movielink will encode its films in Windows Media Audio and Video technology and RealVideo. DRM technology--Windows Media and RealNetworks' Media Commerce Suite--will protect the digital film files from being copied and distributed freely around the Internet. People who use the service will then have a choice to view the films in either Windows Media Player or the RealOne player.

Earlier this year, an executive from Movielink's backer Universal Studios said that it would support the emerging MPEG-4 streaming technology for its coming film download service. But with the latest announcement, MPEG-4 is not a priority. The Yankee Group analyst Ryan Jones said support for a potentially higher-quality delivery technology will take a backseat to the importance of digital rights management from the two providers. Though RealNetworks announced support for the MPEG-4 standard in its latest release of media delivery technology, he said the delivery of MPEG-4 files suffers in the translation.

By not opting to support MPEG-4, Movielink is also turning its back on Apple Computer, which holds up the standard as the centerpiece of its QuickTime media player and is pinning its turnaround in Internet media distribution on the technology. Apple has a longtime relationship with Hollywood film creators, but the company has lagged behind rivals Real and Microsoft in the digital-player wars.

Ramos said that the company has finalized its media delivery partners for now, but it is open to considering new technologies in the future, including MPEG-4 "when it's ready."

The Yankee Group's Jones said that Movielink made its choice based on the need for quality DRM technology to protect a film library from digital piracy--the chief concern of the entertainment industry as more content is converted to digital. He also said that the widespread popularity of media players from Microsoft and RealNetworks likely contributed to the decision to choose both technologies.

"The decision is clearly led by back-office issues, and video quality is taking a secondary role here," Jones said. He pointed to MPEG-4 technologies such as those developed by DivX or the emerging H.264 as more promising than those in the marketplace. H.264, also known as JVT/AVC, is turning heads over claims that it can deliver DVD-quality broadcasts over the Internet using considerably less network resources than rivals.

"Movielink's choice of technology is based on the DRM (technology) of Real and Microsoft and ... the harsh reality of the large install base of players associated with both those companies," Jones said.

 

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