Media Wonk

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CinemaNow spreading virally - September 15, 2008

I really like CinemaNow's viral strategy of embedding its storefront in devices marketed by others and creating both the ecosystem and the backbone for delivering digital content. Last fall, CinemaNow struck a deal with Sonic Solutions to bundle its storefront with Sonic's Qflix platform for burning downloaded content to DVDs using CSS, the copy-protection system used on commercial DVDs and compatible with every set-top DVD player in the world. Today, Sonic announced that Dell Computer will start shipping the first Qflix-enabled DVD drives, both as standalone units and as an option in new PCs, while CinemaNow comes along for the ride: Its digital storefront will now be embedded on drives sold the world's No. 2 PC maker. According to Sonic CEO  senior VP of strategy for Qflix Mark Ely, more deals with leading PC makers will be announced before the end of the year.

In addition to Dell, CinemaNow has deals in place to embed its digital movie store in portable media players from Samsung and Archos, in set-top boxes from DISH Network and in a range of products from HP (Media Wonk prediction: HP will be next PC maker to start shipping Qflix-enabled drives with embedded CinemaNow storefronts). Earlier this year CinemaNow reached a deal with uVuMobile to offer movie trailers on cell phones along with the ability to order the movies to be downloaded directly to your home PC.

It's also been diligent about putting the supply-chain pieces in place to support future growth. Last month it licensed Widevine Technologies multi-platform DRM so CinemaNow content can be played back on Windows, Mac and Linux-based platforms through the Internet Explorer, FireFox, Safari and Opera browsers.

In April, CinemaNow announced a deal with Technicolor Electronic Delivery Services to provide content-delivery services for any device make who wants to embed the CinemaNow storefront or any retailer who wants to leverage CinemaNow's rights portfolio for their own online offerings.

I like the approach because it's essentially a retail strategy--a dynamic that has been notably missing from much of the digital distribution business thus far. The embedded storefront approach is basically a real estate play, designed to leverage its partner's marketing and distribution to extend CinemaNow's footprint into as many locations as possible before a competitor gets there. The digital supply-chain pieces of the strategy are a logistics play.

Real estate and logistics win retail wars: Get there first and have the operational efficiency in place to add revenue without adding overhead or fixed operating costs. It's a way of thinking that has sorely been lacking in efforts to build a digital distribution business, which have focused far too much on formats, platforms, rights management and other technical issues, rather than on business issues.

Rights owners have been as guilty as anyone, for focusing too much on defining usage rules and not giving retailers more flexibility in their content licenses to experiment with different consumer propositions and respond to signals from the marketplace.

It's nice to see someone genuinely think different.



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