RealNetworks Joins Online Movie Subscription Fray

This could get interesting: Less than a month after the major Hollywood film studios launched Movielink, RealNetworks and cable TV movie operation Starz Encore Group are launching a broadband online video on-demand movie service to be sold via subscription.

The new service will be called Starz On Demand and RealNetworks and Starz said it will feature “new hit movies,” offering more than 100 titles a month.

The video-on-demand (VoD) industry is still in the early stages and already there is competition from free file-sharing operations as well as other companies like CinemaNow, LikeTelevision and MovieFlix, among others.

It’s clear that the movie studios and movie distributors are angling to avoid a Napster-like nightmare in which illegal copying and free distribution of content bring not only wrenching change, but also widespread legal battles.

Starz Encore Group CEO John J. Sie made no bones about it, saying that: “I believe it’s a critical time to move to stem the rapid proliferation of illegal and free downloading, or ‘Napsterization’ of movies. If we do not offer a high-quality, simple-to-use, legal means of downloading movies, piracy will erode the … core value of cable TV and direct broadcast satellite systems. It is the same situation as cable faced in the mid 1980’s with the proliferation of C-band satellite dishes, where dish owners were receiving all basic cable channels for free. Imagine where cable would be today had those illegal activities been allowed to continue.”

Videodisc burners are increasing in popularity (a recent quick search on Amazon.com turned up 11 references), and once a movie’s encryption is broken, it can quickly become widely available on the P2P sites.

“Video on demand is undoubtedly the future of home movie viewing,” Jupiter Research senior analyst Ken Cassar has said, although he contends that in the near term, it’s a niche market “because broadband has penetrated only 20 percent of online households and because few consumers want to watch movies on their home computer, anyway.”

Starz on Demand will use the RealOne player with encoding via RealVideo 9 and secure digital rights management technology, and offer the usual DVD-like controls for pause, fast forward, etc. The companies said the new service will launch next spring; pricing for subscriptions has not been disclosed yet.

“We see today’s announcement as a great next step for both our companies and for the entire broadband industry,” said Rob Glaser, founder and CEO of RealNetworks.

The schedule of films on Starz On Demand on RealOne will be similar to those available via Starz On Demand on digital cable. Examples of current movie titles offered include “The Lord of the Rings: The Fellowship of the Ring,” “Black Hawk Down,” “Pearl Harbor” and “The Fast and the Furious.”

Interestingly, it’s not a stand-alone service. The Starz on Demand FAQ has this to say:
Q. Can I get Starz On Demand if I do not have STARZ Super Pak?
A. No. Starz On Demand is an enhancement to the STARZ Super Pak. You must have a STARZ Super Pak subscription on digital cable.

While the VoD market has still not fully caught on for even the most committed movie-watching fanatics, there are still high expectations that by 2006, movies delivered over the Internet or television will account for 25-35 percent of the $10 billion video rental business.