Five of the largest movie studios joined forces Thursday to co-develop an Internet-based movie delivery service for film enthusiasts in the US, showing an early commitment to protect their content on the Web. The announcement was followed by news from AOL Time Warner (AOLTW) that it is to create a new Interactive Video division, hoping to accelerate the growth of video-on-demand, interactive television, and other related services
MGM, Paramount, Sony, Universal and Warner Bros felt that the number of broadband users in homes, businesses and universities in the US warranted the creation of an on-demand movie service via the Web. The studios will offer broadband users recently released films and access to the companies' large film libraries. The studios will also open the service to other film producers and distributors that want to use it as a delivery channel, according to a statement.
Industry pundits have wondered whether the movie industry would face similar issues to record labels battling online music swapping services such as the well-publicized Napster Inc. By creating this service while broadband service is still young, the studios have managed to take early action toward controlling the delivery of their movies.
The companies plan to provide an "appropriate level of copyright protection to enable the legitimate distribution of content on the Web" using Digital Rights Management (DRM) software products which they plan to update as the service rolls out, according to the statement.
None of the studios announced pricing plans or a delivery date for the service at this time, saying that information would be provided at a later date. The service will deliver movies to PCs initially and then possibly to other types of devices in the future, according to the statement. If successful the scheme is expected to be transferred to Europe when the number of broadband users climbs
Time on its side
The new division of AOLTW, which owns Warner Bros, will coordinate company-wide video initiatives, the company said, looking to parlay America Online (AOL) Internet access services into the growth of the Time Warner Cable system by offering these services via broadband. AOL and Time Warner merged in January of this year.
One of the main reasons the companies merged was to create new interactive consumer businesses, AOLTW CEO Gerald M Levin said in a statement.
AOLTW said that consumers have rapidly adopted digital and high-speed services since the company upgraded its cable systems to broadband. The company began the upgrade a few years ago, and 90 per cent of the system is currently digital, an AOLTW spokeswoman said Thursday.
As of June 30, the company had 2.5 million digital cable subscribers, representing a 182 percent increase over the second quarter of last year, AOLTW said. In addition, AOL Internet access subscriptions climbed to 30 million members as of June 30, after adding 1.3 million new members in the second quarter of this year.
In order to take advantage of the thirst for high-speed services, the company said that it plans to roll out a variety of other initiatives, including the offering of multiple ISPs (Internet service providers) through Time Warner Cable, including EarthLink, and a high-speed AOL service due to be launched in September.
In addition, the company is planning to unveil an enhanced version of the AOLTV service later in the year, as well as video-on-demand, HBO Subscription-Video-on-Demand and Cable IP telephony.
Joseph J Collins, the man tapped to convert the company's cable division to broadband has been named chairman of the new Interactive Video division. Collins, who had been chairman and CEO of Time Warner Cable, will report to Levin. Time Warner Cable President Glenn Britt will succeed Collins as chairman and CEO of the cable division. Britt will be replaced by Time Warner Cable Senior Executive Vice President Tom Rutledge.