- The Washington Times - Tuesday, May 10, 2005

Not everyone who downloads movies off the Internet is a pirate. A handful of companies are trying to do for films what Apple Computer Inc. has done for music through its ITunes service: Provide consumers with legal online access to materials they might be tempted to steal.

Two Los Angeles-area companies, CinemaNow Inc. and Movielink LLC, allow consumers to download movies and watch them on a computer. Both services draw from an extensive library of new titles and older films, and both charge roughly $3 to $5 to rent a movie and watch it once.

A third company, TotalVid Inc., specializes in animated films, martial arts movies and “how to” and sports videos.

The audience for legal and illegal online movies is small, but industry executives and analysts believe it will soar in the next few years as more consumers get faster Internet connections.

It can take a few minutes or a few hours to download a single two-hour film, depending upon the caliber of a user’s Internet connection.

Services such as CinemaNow and Movielink also will depend on technological advances that make it possible to move a film off a computer and onto a television set.

“When that happens, this becomes a very big market,” said Jim Ramo, Movielink’s chief executive officer.

The companies would not disclose the number of customers they serve.

Consumers spent $50 million to watch online movies and use other “video-on-demand” services last year, estimates the Yankee Group, a Boston technology research service. That figure is expected to reach $600 million in 2008, Yankee’s analysts predict.

The market for downloading movies illegally is bigger.

Internet users swapped 43.3 million movie files through “peer-to-peer” computer networks in March, according to Big Champagne LLC, a Los Angeles technology research service. By comparison, 1.5 billion music files were swapped in March, the firm reported.

Mr. Ramo and executives at the other online movie companies hope to emulate the success of ITunes, which has sold about 350 million songs online since Apple introduced it two years ago. ITunes sells most songs for about $1 each.

But Michael Goodman, a Yankee Group analyst, said the success of ITunes is relative.

“Apple is doing 350 million downloads, but [digital music is] an $11 billion market. Music is a great example, but nobody is getting rich off it,” he said.

The major Hollywood studios, which have filed hundreds of lawsuits since November to combat the online theft of their films, are beginning to embrace video-on-demand services.

Movielink is a joint venture of several big studios, including MGM, Paramount Pictures and Sony Pictures Entertainment. MGM and most of the other studios also have licensed their titles to CinemaNow.

TotalVid — based in Norfolk — has taken a different approach, targeting the audience for martial arts, Japanese anime and other niches.

It has priced the rate to download most of its movies between $2 and $4 apiece in a bid to compete with Blockbuster and other video-rental chains.

“There is a pretty darn good distribution method out there right now we have to compete with,” said Karl Quist, TotalVid’s general manager.

Rob Spurgeon, a windsurfing enthusiast in the Norfolk area, has downloaded seven or eight windsurfing videos from TotalVid. He plays the videos on a 17-inch computer monitor at his office, using them primarily as “background noise” while he works.

“It’s not like sitting and watching with a bag of popcorn,” Mr. Spurgeon said.

The technology that allows Internet users to move a film off a computer and onto a TV set could take the form of a computer game-style console or some other “node,” but it could be a few more years until it is widely available, Mr. Goodman said.

“If you want to be mass market, forcing people to watch movies on their computer is not how you’re going to do it,” he said.

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