Internet VOD service gets fast break with deals

By Karen Brown

While most other industry watchers see movie studios circling the video-on-demand hoop waiting to take a shot, Intertainer President and CEO Jonathan Taplin is seeing nothing but net.

The Internet-based VOD provider recently has scored a series of long-term, multi-year deals with Time Warner and Universal, DreamWorks, Fox, Disney, Sony and cable channels A&E Networks and Discovery Networks. The studios don't want the contract terms released, but Taplin says he's confident they indicate that the studios are now serious about VOD.

"We think our partners-and that may be because we started earlier than anybody else and they have confidence in us-are pretty bullish on the industry," Taplin says.

Intertainer is up and running with two trials in Comcast Cable Communications territory, using digital set-top boxes to deliver an 8,000-title movie and entertainment catalog over the cable plant. It is also using private IP networks-including Qwest Communications International and Ohio's Broadwing Communications-to deliver movies to PCs rigged with a wireless link, which then bounces the stream to the subscriber's television set. The service is expanding to nine cities and Taplin says the aim is to be in 20 markets by the end of summer.

Intertainer's movie library includes first-run movies, classic films and specials. First-run movies are in the pay-per-view distribution window, so Intertainer can offer the same titles as cable's premium channels.

And so far, Intertainer has made the deals for the titles, with a lone holdout: Viacom Inc. film subsidiary Paramount notably has lagged behind in talks with VOD players, including its own sister company Blockbuster Inc.

"We haven't gotten any content from Paramount either if that makes them feel better," Taplin notes. "Other than Paramount, we've never had any problems."

He adds that the studio's caution is part of its own corporate culture. "I think they are just pretty conservative," Taplin says of Paramount. "They were the last to offer DVDs-almost a year later than any other studio. I think they take their time and that's kind of the personality of the company."

Taplin says there is a good motivator for film studios to expand into VOD distribution. "I think all of them understand that it would be nice to be out of the manufacturing business," he says. "They clearly get a better margin on VOD than they do on the videocassette business. They don't take a lot of risk like they do in the videocassette business. Especially in the sell-through business, if you manufacture too many cassettes, you've got to buy them back from Wal-Mart."

Still, Taplin does see the studios doing some of their own film hawking along with other distribution deals. "I think they'll do both," Taplin says. "Warner Brothers owns a television network called the WB. That doesn't mean they are not selling to NBC and CBS and anybody else that will buy their programming. I just don't think that's the way any sane studio will work. They may have their own online Internet download services and they will still sell to us too-and why wouldn't they? The more people that see the movie, the more money you make."

Taplin says that in the early stages the revenue studios are receiving remains relatively small, "but as the universe expands their willingness to move the window up closer to the video store window will be interesting. That will make a difference."