Consumers Get Their Movies on Demand

No more waiting in long lines at the movie theater, no more trudging to the video store to pay late fees. Now, watching Shrek at 3:13 a.m. in your pajamas is as easy as flipping on your computer.

At least that's what the pioneers in the growing industry of video-on-demand say.

The idea of using high-speed online connections to watch movies when you want them has been a pipe dream for many years. But the new age of VOD, they say, is just around the corner.

Even now, three Web sites, CinemaNow, Intertainer and SightSound, let users watch hundreds of movies whenever they want.

"We're at the same position that the music Internet-distribution business was about two or three years ago, which means that this is just about to explode," said Curt Marvis, CEO of CinemaNow.

In other words, what we've been seeing recently are the trailers, but the main feature's about to begin. The only reason it took so long, according to experts, is because the high-speed connections needed for high-quality movies online weren't widespread enough.

"Depending on what study you believe, 10 to 12 million homes have broadband capability," Marvis said. "Our belief is that over the course of the next two to three years, cable will get to 20 to 25 million homes while broadband will be in 30 to 35 million homes. … More and more people like having that bandwidth in their office environments, therefore they want it in their home environments."

Another factor contributing to the VOD boom is that encryption technologies have vastly improved, assuring studios and the VOD sites they won't be giving away films for free.

And studio support is all-important, according to Noah Robischon, a senior writer at Entertainment Weekly.

"We are seeing a commitment on the part of the studios to put first-run movies on," Robischon said. "That means that studios are seeing this as a viable option."

In a major coup, Intertainer scored a contract to show DreamWorks' Shrek at nearly the same time it became available on cable and satellite pay-per-view. Intertainer, which offers $7.99-a-month subscriptions to some 60,000 users, is also showing John Travolta's Swordfish and Reese Witherspoon's Legally Blonde. CinemaNow has the Martin Lawrence/Danny DeVito flick, What's the Worst That Could Happen?

Several major studios have formed, a joint venture to distribute their films. The partnership, between MGM, Sony, Warner Bros., Universal, and Paramount, was announced last year and is still in development, but is expected to officially launch later this year.

"The studios will supply movies to the service on a non-exclusive basis," the site's press release reads. "Each content provider will independently determine its own release windows and pricing strategies."

Many of the active sites currently offer direct-to-cable or even less mainstream movies. But having a vast library of film fare will eventually make the difference for VOD, Marvis said.

"Sure, people say you have a bunch of second-rate films. But part of the attraction for the VOD of the future is having a huge library of titles you can access that are impractical to keep in a regular brick-and-mortar [video] store," he said. "Let's say you want to watch all the old episodes of Friends. That's something VOD has the potential for."

But Marvis' predictions of VOD catching on quickly are a bit overblown, Robischon said.

"The timeframe of two to three years is very optimistic," Robischon said. "It could happen. I'm not discounting it, but they've been saying that it's three years away for many years now."

At least one high-profile attempt to push VOD into the forefront failed, he noted. In 2000, Blockbuster teamed up with one of the country's biggest corporations to bring VOD to test markets in several major cities.

A year later, Blockbuster nixed the deal. And it was hardly a good omen that the other corporation in the abortive VOD try was Enron.

As for the bottom line, companies like Intertainer and CinemaNow aren't turning a profit yet.

Marvis' site gets about 1.2 million visitors every month, but only about 1 percent of the audience subscribes to the service, which offers pay-per-view options and $9.95-per-month subscriptions. The other 99 percent watch CinemaNow's free movies, which are subsidized with the streaming ads attached to the films.

But Marvis said that the company's low costs, growing library and subscriber list will bring CinemaNow and VOD into the black, and into a home near you.

Robischon said that's an easy prediction.

"Whether it happens in two years or five years, it's going to happen," he said.