Movie studio launches trial of online movie delivery

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Posted 7:54AM on Thursday, February 21, 2002

LOS ANGELES - Metro-Goldwyn-Mayer Inc. on Wednesday launched an online movie delivery pilot, marking the first time a major Hollywood studio has offered consumers feature film downloads over the Internet. MGM has teamed with CinemaNow Inc., an Internet cinema distributor, for a 30-day trial that features two motion pictures. "The idea is to throw it out there and see what happens," said Stacey Studebaker, a spokeswoman for MGM Home Entertainment in Santa Monica. MGM and several other leading studios already "stream" some of their films over the Internet. But this endeavor will also give consumers the option of downloading copy-protected digital video files. The downloads will offer higher quality playback but be programmed to prevent copying and will be playable for only 24 hours. Hollywood faces daunting challenges in determining how it might deliver movies to consumers over the Internet. Slow connections are the least of them. It takes nearly 25 hours to download a 90-minute film using a dial-up modem and more than four hours with a broadband connection. But compression and delivery technologies are constantly improving. The biggest obstacle is the threat of piracy. As part of the trial, MGM will test CinemaNow billing and security software. Not only will customers be limited to a 24-hour viewing window in the MGM test, but Electronic locks in the software will be tested. MGM will be anxious to see whether hackers succeed in bypassing the security software. The studio had earlier partnered with four other Hollywood studios to distribute films online. But Movielink and a second industry venture, Movies.com, have run into problems, including an antitrust probe by the Justice Department. MGM is testing the waters cautiously with its latest venture. Of the two films the studio is putting forward, one was a box-office flop. The other has already been gathering dust in home video for years. "What's the Worst that Could Happen?" was a critically savaged comedy starring Martin Lawrence and Danny DeVito. It cost about $45 million to make and only earned $32 million before debuting on video in December. "The Man in the Iron Mask" rode star Leonardo DiCaprio's "Titanic" success to a modest $57 million box-office success in 1998 but has been out on home video for nearly three years. MGM and CinemaNow will charge from $1.99 to $5.99 to view each film, depending on the connection speed and whether a viewer opts to stream or download the content from CinemaNow's site. CinemaNow, based in Marina del Rey, is controlled by Lions Gate Entertainment. Shares of MGM were down 70 cents, or 3.7 percent, to close at $17.79 on the New York Stock Exchange on Wednesday.