Intel Takes Stake in On-Demand Movies

Take two.

Intel is pushing beyond its core semiconductor business by investing in a joint venture focused on distributing premium movies directly to consumers over the Internet.

The company, ClickStar Inc., is spearheaded by Revelations Entertainment and run by movie actor Morgan Freeman and producer Lori McCreary. The service is expected to launch early next year.

While movie distribution may seem far afield from Intel’s core business, it actually has the potential to contribute directly to the chip giant’s bottom line.

“The number one thing you need to process the next generation of movies-on-demand is more processing power,” said Tim Bajarin, president of the Creative Strategies market research firm.

“Looking back, we will applaud Freeman and Intel for being on the leading edge of this because its adoption is inevitable.”

Bajarin said a third party is needed to push the technology because the Hollywood establishment is afraid to move too quickly in the direction of movies-on-demand at the risk of losing its traditional theater and DVD distribution revenue. There is also concern that encryption technology is far from rock solid leading to additional lost revenue from piracy.

Addressing the latter point, Freeman said in a statement: “Our goal is to deliver first-run premium entertainment to film fans around the world and to make film easier to buy than to pirate.”

ClickStar’s strategy is to create an online service in which consumers can access, pay for and download first-run, pre-DVD-release films and artist-created entertainment channels in their homes. This new online destination will be designed to give filmmakers a vehicle to connect directly with fans and offer consumers a new way of experiencing home entertainment.

Intel president and CEO Paul Otellini called the investment a significant step that will transform the consumer’s entertainment experience in the digital home.

ClickStar, which will be led by former Sony Pictures executive Nizar Allibhoy, plans to release first-run films before they’re released on DVD directly to Intel-based digital home entertainment devices.