Microsoft has announced its joining with Blockbuster to invest in a popular online movie distributor CinemaNow, which is majority-owned by Lions Gate Entertainment, a company that owns one of Hollywood's largest independent film studios, as well as other entertainment concerns. The roughly US$50 million deal, followed on the heels of an October market trial announced by content provider Intertainer, Microsoft, set-top box maker uniView Technologies and ZoomTown.com, a wholly owned Internet broadband subsidiary of Broadwing.
In that trial, Broadwing's Digital Subscriber Line subscribers were able to watch Intertainer content on their TVs.
Industry analysts said these developments bolster the belief that the technical and business issues around delivering major movie titles over the Internet will be solved in the near future.
Bringing movies into consumers' homes lays the groundwork for supplying in-home data networks that could encompass music recording and playback devices, as well as communications services, analysts said. Having Windows Media Player running in set-top boxes is crucial for Microsoft, in terms of penetrating new markets.
In commenting on the Blockbuster-Microsoft-CinemaNow alliance, Steven Vonder Haar, Yankee Group analyst, says: "For [the] companies, this is setting the stage for the long haul."
"For Microsoft, streaming media is just one piece of the puzzle in protecting the Windows franchise. If, ultimately, the computers and computer-style devices are the machines that would process audio and video, Microsoft wants to make sure it is there," he says.
Blockbuster wants to have a ready partner to provide pay-per-view streaming technology and know-how, in dealing with content providers in the Internet space, Vonder Haar says.
Blockbuster's master plan is to enable customers to order a DSL line on the spot while shopping in its stores and then continue renting videos without leaving the house, much as guests do in hotel rooms.
"The advantages to large corporations like Microsoft and Blockbuster, with a company like CinemaNow, is that they can work closely on testing of new concepts and ideas, and I think that is the foundation of the investment decision," claims CinemaNow Chief Executive Curt Marvis.
"This is a continuation of our strategy of helping customers have a great digital media experience," says Jonathan Usher, Microsoft group manager in the digital media division.
