The business and culture of our digital lives,
from the L.A. Times

« Previous Post | Technology Home | Next Post »

Film Fresh to offer Hollywood movies in DivX

August 26, 2009 |  5:00 am

Film Fresh, DivX, Sony Pictures, Paramount, Warner Bros., Lionsgate, DRM, CSS, downloadable movies Online movie retailer Film Fresh announced today the availability of movies from four Hollywood studios in the DivX format, marking the latest step forward for the downloadable movie business. DivX had previously announced licensing agreements with Sony Pictures, Warner Bros., Paramount and Lionsgate; FilmFresh, which had already been offering some independent and foreign titles as downloadable DivX files, becomes the first U.S. retailer to take advantage of DivX's new relationship with Hollywood.

The main shortcoming for DivX is that DVD players and other devices require special software to decode and decrypt the format. But DivX compatibility has spread rapidly through the consumer electronics industry, most recently among TV makers and mobile phone manufacturers. Its main advantage over the formats used by other downloadable film outlets (e.g., Amazon and Apple) is that its domain-based DRM makes it far simpler for consumers to watch protected DivX movies away from their computers. DivX files can be stored on portable hard drives, USB drives and memory cards, enabling them to be moved easily and cheaply from screen to screen (assuming the device they plug into is DivX compatible). And any computer with a DVD recorder can burn a protected DivX download onto a standard disc. By contrast, creating a DVD with the CSS DRM that Hollywood studios favor requires a special burner and customized discs.

Rick Bolton, chief executive of Film Fresh, said his site would have about 600 Hollywood titles today, consisting of a mix of new and old releases. The addition of the major Hollywood studios signals a transformation of the online retailer...

...whose inventory used to be exclusively indie and foreign. Now, Hollywood titles are front and center on the site. There's also a much greater emphasis on downloads than on packaged products -- the amount of downloadable titles is rising from about 20% of the inventory to 50% or 60%, Bolton said, mainly because almost all of the new Hollywood offerings are available digitally. In fact, he said, a number of the older Hollywood movies aren't available on disc -- either they haven't been released on DVD or they're out of print. These include "Play It Again, Sam" and "The Parallax View."

Unfortunately, the downloads are available only for purchase (at $10 to $16 each), not for rental. That's a shame because DivX's DRM is the only one I've encountered that allowed me to burn a rented movie onto a DVD that I could watch in my living room on a low-cost DVD player, rather than a PC or game console. DivX CEO Kevin Hell has said that the company's agreements with the studios contemplate movie rentals, too, but it's starting with download-to-own files only.

My guess is that enabling rentals would be less important and the download-to-own option more compelling if the typical customer were shopping for movies that could be stored in a digital video jukebox, as millions of consumers are doing with their music collections. That day isn't here yet, mainly because the studios have been so reluctant to let it arrive. At least DivX makes it easy to burn downloaded movies onto conventional DVDs for storage, which may be enough to satisfy most consumers at this point. "We feel that we're right at the tipping point now for downloads," Bolton said, adding, "We're betting that consumers want to own films."

One other factor favoring downloads, at least from Film Fresh's point of view: There's no inventory risk for the studio or the retailer. That liberates companies such as Film Fresh to offer as many titles as possible without having to buy copies in advance or guess how many will sell. The only caveat today is that Hollywood still enforces its release windows, meaning that a new release will get yanked out of an online retailer's inventory when it's time for the movie to appear on HBO or Showtime. Bolton said he has far more flexibility over pricing downloadable films than DVDs, so he plans to experiment with discounted movie bundles and dynamic pricing that responds to demand. "No one's really begun to explore this yet," he added. To which we say, after you, Kevin.

-- Jon Healey

Photo: A screen shot of Film Fresh's home page.

Healey writes editorials for The Times' Opinion Manufacturing Division.