The Marketplace Report: Movie Download Milestone

Movielink and CinemaNow, two online movie services, plan to begin selling major films online for downloading directly to computers, on the same day as DVDs are released in stores. Alex Chadwick talks to Janet Babin of Marketplace about this watershed event for the entertainment business.

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ALEX CHADWICK, host:

Back now with DAY TO DAY.

Starting today, you are able to watch the latest DVD release online. You don't need to go somewhere and get a disc. You can get it online. Six major movie studios are now offering feature films just moving to DVD. There's a web site called Movielink. Marketplace's Janet Babin is here. Hi, Janet. How does this work, which studios are participating, and how fast will viewers be able to download?

JANET BABIN reporting:

Hi. So it's Warner Brothers, Universal, Sony, Paramount, 20th Century Fox, and MGM are involved in the Movielink site. And then Sony, in a separate announcement, along with Lionsgate, announced that they'll sell films online at CinemaNow, and both companies say the downloads will cost about $20.00 to $30.00 for newer films, and some of them are going to be available, as you said, the same day that you can get them on DVD, and most will be available within at least 45 days of that release date.

CHADWICK: But what I've read so far is there's a catch in this. There are limits as to where you can watch the movies.

Ms. BABIN: Yeah, and that is to try to limit piracy. I mean, the studios worry that if you could play the movie on a DVD, you'd just keep burning it, and they'd end up losing money, so you can only download the movie onto your PC. In some cases, you can download it onto a device that also plays games, like an X-Box, and if you have the right equipment, like a Slingbox or Microsoft Media Home Entertainment Technology, you can watch the downloaded movie on your television.

CHADWICK: This seems like a sort of major point, because people like to watch these movies in their homes on their home theater setups. Not that many people, I think, are wild about watching a movie experience on a laptop, say.

Ms. BABIN: That's right...

CHADWICK: It's one thing if you're playing it going across the country, but I'm sorry.

Ms. BABIN: Right, and that's what analysts are worried about, that it's going to take so much effort that consumers aren't going to be into this. And they point out a number of other possible problems, like it's going to take up to two hours of broadband time to download the movie, and then you're going to need a lot of gigabytes on your hard drive to store it.

CHADWICK: Hmm. Why are the studios acting to make this available now?

Ms. BABIN: Well, I spoke with Porter Bibb about that. He's with Mediatech Capital Partners, and he says the studios were afraid that people were just going to start pirating movies if they didn't act soon. Bibb calls this announcement the beginning of a major shift in Hollywood's business model.

Mr. PORTER BIBB (Mediatech Capital Partners): You're looking at a major blockbuster industry, the movie industry, that is on the brink of the same kind of destruction and dissolution of its formed a business model that the music industry faced, and, in the end, they're never going to get the margins that they've enjoyed for the last 75, nearly 100 years, but that doesn't mean there won't be an industry going forward.

Ms. BABIN: More on this story later today on MARKETPLACE.

CHADWICK: Thank you, Janet. Janet Babin of public radio's daily business show, MARKETPLACE, produced by American Public Media.

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