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Bertelsmann fledgling Arvato is now moving through the gears on a Europe wide assault on legal video delivery using a peer to peer filesharing system.

Last week it added EMI music content, now has its first official video partner in Warner Brothers, and has a name for the service, In2Movies.

There is no mention however of its German partner, CE player Medion, who signed up with Arvato in September last year to offer this German film service.

Arvato is trying to become the technical engine behind a whole marketplace of separate film and TV services across Europe. It will white label the services and let other brands take on the difficult task of marketing, preferably to their existing customers where they are ISPs. In effect, it wants to act as the trusted agent in the deal, seeing to the DRM and delivery network, and ensuring the movie industry can work with multiple partners without letting each of them get their hands on content which is not encrypted.

Arvato will do ingest, encoding, DRM and service delivery for a host of services, a bit like Loudeye that sits behind multiple music services in Europe. This will also give content businesses a single port of call for negotiating complex rights agreements. However, the outcome may well be handing a Europe wide content delivery monopoly to Arvato.

The German company uses a P2P delivery mechanism called Gnab, which is somewhat similar to Bit Torrent. It breaks up film files into smaller chunks and once there are many copies of each film out on customer PCs, it schedules the delivery of each of the component parts of the piece of video, from separate locations, in parallel.

We understand the new service will use Windows Media formats and Windows Media DRM protection, and Arvato is known to be negotiating similar deals with well known brands in each of the European countries and will provide the start up server power need to seed the files into the marketplace. It will also handle all royalty reconciliation back to the content owners.

Last summer, Arvato was quietly warming up the market to receive the likely 500 films that Sony said last January it would release for purchase over the internet, and which have not yet been seen. Presumably the content deals will all roll out over the coming months and then the service will finally launch.

At the Medion website that was set up for this service (which was supposed to be back in November), www.medionbox.com, it simply says it is "coming shortly".

Presumably Medion is still in the loop, but then again at the In2Movies.de website it says much the same, with a chance to sign up for a free newsletter about the film service. Perhaps Medion is no longer the partner, or perhaps it is, and the two websites could be different personalities of the same beast.

No exact detail of film pricing is available yet but it is understood both download to rent and download to buy and burn offerings will be available.

With the initial rollout, consumers will be able to download movies and television shows to their personal computers. The second version of the service will expand on consumer download options and enable them to download programs to DVD recorders and portable devices.

The release confirms that Germany is only the first stop and that this is expected to be a global operation eventually, certainly Europe-wide. It seems somehow fitting that it is a Bertelsmann subsidiary, long blamed for its investment in Napster and for the downfall of the US music industry, which finds itself in pole position with the same P2P technology now that films are the focus for online delivery.

In2Movies is intended to launch in March 2006 and will initially feature more than 80 Warner Brothers new releases, catalogue favorites, and local productions including "Batman Begins," "Charlie and the Chocolate Factory", "Friends", and "Harry Potter and the Goblet of Fire".

Arvato said in Germany during the first half of 2005, 1.7 million internet users illegally downloaded a total of 11.9 million movies. Research has shown that 20 per cent of illegal downloaders do so on a weekly basis. However, 73 per cent of all illegal downloaders in Germany are interested in a "paid for" movie download service.

Copyright © 2006, Faultline

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