CinemaNow Annouces Pay-Per-View Movie Service

CinemaNow (www.cinemanow.com), took a step towards the future of video on demand Thursday, with the release of its pay-per-view movie initiative. "Heaven's Burning" starring Russell Crowe, is now available for streaming for $2.99, which allows the purchaser 48 hours of access to the movie.

CinemaNow has chosen Windows Media as the playback format and iBeam's e-commerce platform to handle the transactions. Backed by Lions Gate Films, CinemaNow holds the exclusive Internet distribution rights to a large library of feature-length films.

According to Curt Marvis, CEO of CinemaNow, the company has been positioning itself for this type of pay-per-view release since its launch last December, and this first foray is the result of months of work with Microsoft and iBeam. CinemaNow has been busy building its online viewing audience by offering movies streamed for free. Mavris reported 250,000 unique streams were delivered last week alone.

Marvis admits, however, that viewers do not tend to sit at their PC's for two hours straight watching a streamed movie -- the average time spent is around 9 minutes. Through a relationship with Blockbuster, CinemaNow has been researching the movie watching habits of home video consumers and is heartened by statistics indicating many movie rentals are not consumed in one sitting.

"People are used to a certain quality when it comes to watching movies, and the technology [for streaming] is just not there yet," said Tom T. Moore, president ofReel Media International, when asked to comment on the state of pay-per-view over the Internet. Reel Media is a video distribution company, which has provided videos for sites like Payforview.com and MeTV.com. When making deals with Internet broadcasters, Moore said he is sure to get a guaranteed minimum payment if the deal involves payment for unique streams.

CinemaNow is taking these brave steps slowly. Currently it has plans to release only one movie at a time for pay-per-view, with "Heaven's Burning" running on the site until December 9, 2000. Marvis is counting on college students being early adopters of its services, as they are more accustomed to using their computers as entertainment centers.

CinemaNow isn't the only company doing pay-per-view. SightSound.com (www.sightsound.com) was the first to experiment, putting the underground movie "Pi" up for sale in April 1999 for $2.95. The big difference is that SightSound requires users to download movies in their entirety, rather than stream it. SightSound is still moving ahead with its downloadable movies, but has not disclosed whether it has been a success or not.

Another major test for pay-per-view movies will be at the end of this year when Blockbuster starts testing its movies-on-demand service. Blockbuster said it was teaming with Enron Broadband and digital rights company, InterTrust, to introduce the service in multiple U.S. cities. Blockbuster has not disclosed pricing or if it even had backing from the major movie studios.

Is streaming pay-per-view a viable business model? Eric Scheirer, a Forrester Research analyst, says that current technology cannot provide a compelling experience but feels that CinemaNow will benefit from being a first mover. "Somebody's got to try it. It's not going to work, but they will learn important lessons from the experience. It is a step forward," said Scheirer.

Even Moore, who is supplying movies, has some reservations. "I feel that pay-per-view [over IP] will not take off until the computer is married with the TV," said Moore. "It is coming, but in the short term the experience is still not great."

CinemaNow's Marvis, however, is optimistic. "You can't theorize about whether it will be successful -- you got to do it," he said. "I am proud that we are doing this, and that Lion's Gate is going forward with it. Let's lead the way."