IT'S ABOUT TIME
A growing number of services let viewers
pick what they want to watch, when they want to watch it
By Martin Peers
When Christopher Lindsell wants to watch a movie nowadays, the 29-year-old
Cincinnati research scientist plops down on his couch with his wife
and son and checks out Intertainer.TV (www.intertainer.tv
), a new entertainment service available via computer.
With Intertainer, Mr. Lindsell can order a movie in advance, watch it
when he wants and even pause it while he gets more snacks -- all with a
click of the mouse.
"We really like the convenience," says Mr. Lindsell. "We like the
ability to click a few buttons, see a preview, see a brief description. We
have children in the household, so we like to see whether it contains adult
content. We can then sit down as a family. [We] don't have to plan
Mr. Lindsell is one of about 2,400 people in the Cincinnati area able to
order movies or television shows from Intertainer, which delivers
programming via souped-up telephone lines or digital cable through the
computer to the TV set. Viewers can order everything from editions of "Meet
the Press" or "NBC Nightly News" an hour after they're aired to recently
released movies such as "Gladiator" and older films, for prices ranging
from 75 cents to $3.99. The programs run like they're in a videocassette
recorder: Viewers can stop, start and rewind them as much as they want
within 24 hours of the initial order.
Intertainer is one of a number of emerging electronic-entertainment
services that allow consumers to order movies and TV shows and watch them
at their leisure. But Intertainer Inc.'s service has a head start in
getting programming. The Culver City, Calif., company has signed long-term
supply deals with several Hollywood studios, such as the Warner Brothers
unit of AOL Time Warner
Inc. and Vivendi Universal
Pictures, while its rivals are still in negotiations on such deals.
Intertainer also has deals for TV programming from
Co.'s NBC, as
well as several cable networks such as Discovery Channel and A&E
Television Networks, which includes the History Channel and the Biography
Intertainer is a closely held company whose investors include its
founders, Chairman Richard Baskin and Chief Executive Jonathan Taplin, as
well as big companies like Microsoft
Corp. and NBC.
Right now, Intertainer is available only to a small number of people in
Cincinnati, through Internet-access company Zoomtown.com
), a unit of Broadwing
telecommunications concern based in Cincinnati. But Intertainer expects the
service to be available in many more major markets over the next few
Movies When You Want
The service is similar in some ways to the pay-per-view options offered
on cable or satellite-TV systems, giving consumers the ability to pick a
movie they want to watch for a fee. Pay-per-view, however, offers only a
few movies at fixed times, whereas Intertainer allows consumers to scroll
through a list of several hundred movies or TV shows and order one
Intertainer isn't offered over the Internet, like many of the other
services such as SightSound.com
) from SightSound Technologies of Mount Lebanon, Pa. The company
decided against making its service available on the Internet largely to
ensure its movies and TV shows had the best picture quality and because of
concerns from the major Hollywood studios over rampant illegal copying on
Instead, the company sends its signals over private computer networks,
connecting to homes either by high-speed phone lines known as digital
subscriber lines or by digital cable. Consumers can buy a device that
switches the signal from their computer to their TV set. Intertainer has a
Web site that offers music videos and movie trailers to promote the main
service, and allows for some e-commerce opportunities, like selling
Customers getting Intertainer through DSL, currently the most common way
to get the service, usually would log onto Intertainer through their
computer, clicking on an Intertainer icon on the DSL provider's home Web
page that gets them into a private computer network. After typing in a
password, customers first choose a movie genre (comedies, dramas, action)
and then pick a film in that genre. Consumers find the movie they want to
watch, order with a click of a mouse and get billed either through their
credit card or their DSL provider. (Cable operators would likely make
Intertainer available as an added feature of digital cable, available
through a set-top box with remote control.)
For encrypting and playing programming, Intertainer is using Microsoft's
Windows Media software. The software giant also will integrate the service
in its Microsoft TV software, which is being put in set-top boxes for
interactive-TV services of some cable and satellite-TV operators. That
integration makes it easier for these companies to offer Intertainer.
Supplementing revenue from movie and TV orders, Intertainer aims to
generate one-third of its revenue from advertising and e-commerce. The Web
site allows consumers to play a music video and then click onto a site
selling the related album. Intertainer also has interactive features built
into some of its advertising, enabling viewers to get information and make
While consumers who have used Intertainer or other movies-on-demand
services are enthusiastic, there are still big hurdles to overcome before
the services are widely available.
Intertainer is facing plenty of competition, both on and off the Web.
Cable operators like AOL Time Warner and Cox
Inc. are planning to offer their own service. Some
of the Hollywood studios are planning to launch their own Web-based
services, while some independent Web concerns are offering movies on
demand, although with a very limited number of movies.
But Intertainer is ahead of most of its rivals when it comes to
programming. Most cable operators are still negotiating long-term deals.
And the independent Web-based services are finding it difficult to get
movies from major studios because of worries about illegal copying.
Programming's importance was highlighted earlier this month when another
potential rival, a joint venture of Blockbuster
Inc. and Enron
Corp., abandoned its efforts
because of Blockbuster's difficulty in negotiating movie-supply deals.
Meanwhile, Intertainer currently offers about 300 movies and 25
different types of TV shows at any one time, though its programming deals
give it access to between 8,000 and 10,000 movies. However, making all the
movies available simultaneously would be prohibitively expensive.
Intertainer expects new computer-network designs and the declining cost of
data storage will enable it to increase the number of movies offered at the
same time within a couple of years.
Also putting a crimp on movies-on-demand services' offerings are major
Hollywood studios. Because of concerns of illegal copying, the studios have
been reluctant to provide movies and shows. Avoiding the Internet
altogether has helped Intertainer get more programming, but it has forced
the company to rely on phone companies or cable operators to offer its
service. And most of the programming available on Intertainer is at least
several months old, reflecting Hollywood's desire not to threaten the
mountains of revenue they get from video rental chains by giving
Intertainer movies before they're offered on video.
As a result, Intertainer -- like other movies-on-demand services --
doesn't offer movies until after they've been in the video stores. That is
likely to reduce the number of orders for Intertainer, which gives an
undisclosed share of its program fee to its entertainment providers. Mr.
Lindsell, for instance, says his family also rents movies from video-rental
stores but would use Intertainer as his "primary source" once the service
has "more diverse product" available.
Agreements with cable networks licensing their shows to Intertainer come
with similar caveats. When A&E Television Networks agreed in January to
provide programming to Intertainer, David Zagin, senior vice president of
affiliate sales, says the deal was limited to older titles in the company's
library -- which could be anywhere from a few months to a few years old.
Offering newly aired programs for Intertainer's on-demand service could
reduce the need for consumers to watch the networks on cable.
"We never want to give people the impression you don't have to have
A&E and History" on cable, Mr. Zagin says. A&E is owned by Walt Disney
Co., Hearst Corp. and
Discovery Networks has a similar stance. Discovery, a unit of Discovery
Communications Inc. of Bethesda, Md., supplies "library" products, shows
roughly six months old, from its networks, which include Discovery Channel,
the Learning Channel, Animal Planet and the Travel Channel. These shows
include Discovery Channel's "Ultimate Guide," a travel-adventure series
focusing on exotic destinations like the Amazon. David Karp, a senior vice
president of interactive television for Discovery Networks U.S., says the
on-demand offering is a "companion" business to the primary business of
running its cable networks.
"We are not going to do anything that will detract from our programming
networks," he says.
NBC's deal does give Intertainer the right to offer slightly delayed
editions of "NBC Nightly News" and "Meet the Press." But the agreement also
gives Intertainer programming from NBC's library, including episodes of
"Saturday Night Live," movies of the week, comedies and dramas. The shows
could date as far back as 20 years. Indeed, NBC doesn't want to threaten
the value of newer shows in the hugely profitable television syndication
market, where independent TV stations buy programming, says a person close
to the network.
But even with the content constraints, Intertainer's Mr. Taplin believes
the company can build a commercial service from the programming it has. Mr.
Taplin says the company needs about half a million subscribers ordering at
least one movie every three months to break even. It now has about $30
million in the bank, enough to keep the service running until the end of
2002, though Mr. Taplin hopes to raise more money from existing and new
Reaching that half-a-million target will largely depend on Intertainer's
ability to get into homes as well as beat the competition. Lydia Loizides,
an analyst in the digital-TV group of New York-based Jupiter Research, says
Intertainer is "very solid on the content-partnership side" and had a
better than 50-50 chance of meeting its target. She notes, however, that
cable operators and telephone companies are planning to "go after the same
dollars that are in consumers' wallets, so who gets there first is
something to be determined."
So far, most cable operators are opting to offer their own version of
movies on demand, licensing the movies through an industry-owned consortium
or through other services. The only cable operator to be actively working
with Intertainer is Comcast, one of the nation's biggest cable operators.
Comcast is currently testing just the movies-on-demand part of
Intertainer's service as an additional feature on its digital-cable
service. It's unclear whether Comcast will offer Intertainer once it has
completed the test, say people familiar with the situation.
All that means is that Intertainer will likely have to rely mostly on
telephone companies' DSL services in order for the service to grow.
In Cincinnati, Zoomtown President Michael O'Brien says he plans
to expand the offering to all Zoomtown's 40,000 DSL customers in
the first half of this year. Qwest Communications International
Inc. of Denver also is testing Intertainer's service on its DSL
lines and plans to introduce it in half a dozen markets, including
Seattle, Portland, Ore., Denver and Phoenix. Mr. Taplin hopes Qwest
will roll it out commercially by April, although a Qwest spokeswoman
wouldn't confirm the timing of the rollout.
Mr. Taplin also hopes Intertainer will be available in major markets
like New York "by the end of the summer" through telephone companies like
service. A Verizon spokesman says the company was doing technical trials --
offering "many" video-on-demand services, including Intertainer, free to
some of its customers. The spokesman says Verizon "won't speculate" on when
these services would be commercially available.
A major rollout of Intertainer would help persuade studios and networks
to give up more timely content. Mr. Taplin says getting newer movies and TV
shows will require "a large market of people" ordering movies so those in
Hollywood can see they can make money from Intertainer and services like
it. "It's an evolutionary process," he says.
-- Mr. Peers is a staff reporter in The Wall
Street Journal's New York bureau.