March 14, 2005 10:00 AM PST
New methods eyed for buying movies
The Menlo Park, Calif., company has created a site at which consumers can trade their old DVDs with one another, thereby stretching their entertainment budgets and clearing out clutter.
Peerflix is one of a number of outfits determined to change the way consumers get their movies. Inspired in part by the success of rent-by-mail pioneer Netflix, a crowd of innovators is stepping forward to prove there is still lots of fat that can be trimmed from the system. Besides offering movies for less, many of these companies hope to exploit the blandness of cable outlets by linking up with producers whose movies, for whatever reason, never clicked with the public at large, but which may still appeal to aficionados of particular niches.
The world of movie distributing has a flurry of new entrants--following Netflix--who say they can deliver a greater variety of movies to consumers, at lower prices, in more convenient ways.
These upstarts face financial challenges as they try to get licenses from content providers, forcing at least one of the newbies to deal only in adult films for now. Still, Net video entrepreneurs are countering the hard economic realities with creativity and optimism.
"Five to six studios account for 90 percent of the box office but only 50 percent of the movies made," said Jim Flynn, chief executive of EZTakes, of Easthampton, Mass., which has created a service in which consumers legally download movies to PCs, where they can burn them to disc. "Rights holders set up their own DVD download store."
At the same time, Hollywood itself--determined not to make the same mistakes as the music industry--has begun experimenting with new distribution models.
Four of the biggest studios jointly back Internet movie download service MovieLink, and Disney has launched trials for an over-the-air download service called MovieBeam.
In addition, cable companies, including Comcast, now offer video-on-demand services as part of their digital cable packages.
The presence of industry giants hasn't deterred a flurry of upstarts, however, who see the studio efforts as half-hearted at best. Start-up Akimbo Systems sells movie downloads over the Internet for playback on PCs, and currently offers some 25,000 titles, mostly from smaller independent or obscure studios. Akimbo recently unveiled a set-top box, allowing delivery and playback of movie downloads on a television rather than a PC.
Netflix, too, hopes to evolve past its dependence on the U.S. Postal Service to become an Internet-powered service. The company late last year announced a joint venture with TiVo to create a movie download store. Executives at music download pioneer Napster have also set their sights on a video service, CEO Chris Gorog told a crowd at the Cannes Film Festival in January.
Is porn the only moneymaker?
Video on demand and current download services, however, aren't exactly consumer-friendly, argues Flynn of EZTakes. Consumers have to get a special set-top box, watch movies on their PCs or "have an engineering degree." His company's service allows consumers to own the movie by burning their own discs, while producers cut costs associated with packaging and inventory.
Flynn estimated that roughly 20 million households in the United States have DVD burners and high-speed network connections--and therefore could take advantage of the system.
But connecting the Internet and TV sets isn't the only hurdle for new video services. Another problem is getting quality content at rates that
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