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When Sonic Solutions, a company synonymous with marketing software enabling the burning of music CDs and DVD movies, quietly acquired movie download service CinemaNow for a paltry $3 million in 2008, few people cared.
After all, CinemaNow, along with fellow download pioneer Movielink (itself purchased by Blockbuster Inc. for $7 million in a fire sale), had failed to generate much consumer interest in movie downloads (even with adult content) to the PC since launching in 1999.
Fast-forward two years and the concept of Internet-delivered movies into the home on the television is no longer science fiction. In fact, it's hot. And while consumer adoption remains limited, electronics manufacturers have embraced the concept with the belief that further enabling a connected consumer pulls them up the ladder in the entertainment distribution food chain.
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HM: Consumer electronics devices offering CinemaNow movie downloads have topped 1 million, up 66% from just September. Why has electronic access to movies become hot among CE manufacturers?
Habiger: What we're doing with CinemaNow is helping CE manufacturers participate in the entertainment value chain for the first time. Manufacturers now have the ability, by pairing their devices with a CinemaNow-enabled service, to offer a complete experience out of the box. Before, there were dumb devices that could only play back content. Now, you can get a CE device that not only plays the content but also delivers it. Over-the-top services offer a great consumer experience that provides a very efficient and easy way to deliver movies. In the same way that applications complement and extend the capabilities of the iPhone, services like CinemaNow provide a natural extension of the capabilities of CE devices.
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HM: Best Buy is launching an ambitious digital content store with Sonic support that offers music and movies this summer. Are consumers ready for electronic consumption of entertainment?
Habiger: Consumers have undeniably shown they're ready, and the studios have been extremely supportive. The industry is currently in a period of transition, where it's important we educate consumers. There's still a need to increase awareness, which we're doing by partnering with retailers like Best Buy and Blockbuster.
Best Buy can educate consumers at the store, letting them know that the TV for sale is Internet-enabled so you can buy it, plug it in and have the new Harry Potter movie waiting for you when you get home. There's an opportunity to do some bridging and consumer education, and Best Buy has the Blue Shirts and Geek Squad to help do exactly that.
Plus, people are already used to the concept of making micro-payments, like paying a dollar to download a ring-tone onto your cell phone. That's essentially what we're talking about: making a micro-payment so you can buy a movie and make your son happy while he's in the backseat of the minivan. Once people click and conveniently get a movie from their CE device, they're hooked.
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HM: How important is the Internet-enabled Blu-ray Disc player to the evolution of digital distribution of movies?
Habiger: It plays an important role as one of the stepping stones for consumers to experience digital distribution. It's a great bridging technology the Blu-ray device can play discs and also accept movies electronically. It helps consumers get comfortable with the idea of downloads.
I believe there will be an expanding ecosystem of CE devices that give consumers the flexibility to manage and seamlessly move content between their devices. This is a very powerful channel to deliver premium content and provide a very compelling consumer experience. Ultimately, the amount of connected CE devices and services in the market will be in the hundreds of millions, and digital distribution is going to be ubiquitous.
Just like you can't find a cell phone without a camera these days, I predict you won't be able to find a CE device without a CinemaNow-powered service on it.
