April 8, 2002 6:40 PM PDT

MovieLink expected to use MPEG-4

LAS VEGAS--MovieLink, a joint venture among five major movie studios, is expected to launch its Internet video-on-demand service later this year using MPEG-4 technology, a studio executive familiar with the plans said Monday.

Peter Marx, vice president of emerging technologies with Vivendi Universal, told an audience at the National Association of Broadcasters that MovieLink will use MPEG-4, but later clarified that the service has not yet committed to just one format. The remarks are among the first public hints regarding the underlying technology MovieLink plans to employ.

"This will be the first time you can get a high-quality movie download," said Marx, contrasting MovieLink with existing Internet video services such as Intertainer that use streaming technology. He added that MovieLink will allow each studio to set prices for its movies separately, rather than dictate prices across the board.

MovieLink's backing would be a major coup for MPEG-4, which has been proposed as a new standard for digital video. The format offers new interactive features as well as fourfold improvements in compression over the current MPEG-2 standard. It has already won endorsements from a number of digital media heavyweights, including Apple Computer and Sun Microsystems. But it has also become mired in disputes over proposed licensing terms.

On the Internet, MPEG-4 faces competition from proprietary formats from companies such as RealNetworks and Microsoft.

MovieLink is backed by Sony Pictures, Viacom's Paramount, Metro-Goldwyn-Mayer, AOL Time Warner's Warner Bros. and Vivendi Universal. Its service is expected to launch in the latter half of the year, although a date has yet to be set. A rival service from Walt Disney and News Corp.'s 20th Century Fox called Movies.com is also in the works.

Naysayers contend that the MovieLink technology--which will deliver movies over the Internet to a PC--cannot compete with television and cable as the prime entertainment pipes into the home. Announced last year under the name MovieFly, MovieLink has proceeded slowly. It waited until January, for example, to appoint its first chief executive, industry veteran Jim Ramo.

Some analysts have suggested that the movie studios may be interested in setting up online distribution partly to strengthen their hand in high-stakes negotiations with cable companies, which are in the midst of developing on-demand products.

So far, the online entertainment experiment has resulted only in high-profile commercial flops, such as the collapse of the Digital Entertainment Network, Pseudo.com and AOL Time Warner's Entertaindom.

But the studios say they are eager to move quickly to the Web, in part to avoid the digital disaster that has struck the recording industry. A lack of consumer-ready Internet services may have contributed to what some now describe as an entrenched culture of online music piracy.

Long sheltered by a technology gap that made video-on-demand impractical, the studios increasingly face a race to market with cable operators and even Internet-based rivals.

Earlier this year, Taiwan-based site Movies88.com briefly offered Internet video-on-demand services charging consumers $1 for each movie. The site was quickly shut down by the threat of legal action, but it served as a proof of concept that VOD sites could soon populate the Web.

MovieLink does have a few advantages in its court. For example, it already owns the rights to the film catalog of five of Hollywood's biggest studios, bucking a general trend of reluctance among copyright holders to open their content to online distribution out of fear of piracy.

Marx's remarks came at an NAB panel titled "Convergence: New Economy Distribution Business Models for the Entertainment Industry."

 

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