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RealNetworks has finally got its hands on a movie service to show-piece its own video player alongside its market leading Rhapsody online music service. It has done it in a deal with Starz Encore, the cable TV film supplier, which was cut two years ago, but which is finally going ahead after what appear to be legal delays.

The story was uncovered by Paidcontent.org, which said that the two companies had confirmed that the deal was finally about to go live next week, as a hybrid download-streaming service, in effect a download service with a buffer, which calculates when it can start playing a film so that the rest of the download will complete in time to be seen. Movielink recently upgraded to this type of service.

The original deal was announced with a fanfare back in 2002, but failed to emerge, with the studios that supply Starz with its films saying that it didn't have the rights to online distribution.

Starz tends to have the rights to films while they are in their pay per view window and beyond it, just like the film services Movielink and Cinema Now, and as a result, there aren't enough of them to create a genuine Video on Demand service. If it adds older films it would have rights to around 750 titles at any given point.

Movielink has around 500 films on its lists, whereas the Starz RealNetworks service is to be structured so that only 100 films are available each month for a flat subscription fee of $12. Chances are many of them will be similar month to month, resulting in little more than the pay per view services available on cable. Still, at least the price is cheap.

Genuine IP VoD services operating in Europe and Asia have been shown to be highly effective when they carry as many as 3,000 films and TV programs and many of them charge per film, like Movielink. Paidcontent, which broke the story, believes that this is due to exploitation of a legal loophole in Starz contracts. The studios have always maintained that Starz can only offer the films "on demand" alongside its usual cable subscription service. By offering the films as a subscription its lawyers reckon it honours this clause.

Cinematic anachronism

In fact the pay per view genre is really an anachronism, as successful theatrical releases go on sales after most of their cinema cash has been earned. They go to DVD first so that people can buy the film outright and about 6 to 8 weeks later go on the pay per view circuit for under a year, before being released onto premium movie channels and finally the TV repeat circuit. The entire cycle, in Faultline's view, will eventually be disrupted by IP carried online VoD services like this one, as broadband line penetration grows.

The movies will only be playable when viewed through the RealNetworks Realplayer which has basic copy protection and some DRM rules to prevent subsequent copying. It's seems likely that the service is really effectively a video rental transaction and that permanent copies of the film will not be allowed.

The original deal is a five year exclusive deal between the two where they share revenue, which means that Starz can't change its mind and offer Microsoft Windows Media Player files, for at least another three years.

Most PC downloaded films tend to be viewed on PCs, but increasingly there are ways of getting content from a PC to televisions and music players, and Realnetworks recently demonstrated this with a Rhapsody music deal using Linksys Wireless LAN technology. It will almost certainly do the same with video now it has the rights to some of Hollywood's content.

Another film IP download subscription service, MovieFlix, recently claimed that it has just passed the 10,000 subscriber mark, but that offers 3,000 cult classic, niche and hard to find films.

© Copyright 2004 Faultline

Faultline is published by Rethink Research, a London-based publishing and consulting firm. This weekly newsletter is an assessment of the impact of events that have happened each week in the world of digital media. Faultline is where media meets technology. Subscription details here.

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