Fox to Sell Films Online

Signaling its ambition to turn MySpace into an entertainment marketplace, News Corp. today is expected to unveil plans to sell downloadable copies of 20th Century Fox movies and TV shows through the popular social network and other Fox Interactive Media websites.

The announcement comes a week after Fox signed a major advertising deal with Google Inc., intensifying News Corp.’s race against Viacom Inc. and other entertainment companies to cultivate younger audiences online.

“This is a great example of how to build yet another revenue opportunity into MySpace in addition to advertising,” said Pali Research analyst Richard Greenfield. “It’s layering in a commerce element that currently doesn’t exist.”

When it launches in October, the service is expected to include movies such as “X-Men: The Last Stand” and “The Omen,” for $19.99, and shows such as “Prison Break” and “Bones,” for $1.99 an episode. Movies will be available when they’re released on DVD, and shows will go online 24 hours after they air.

Analysts said the immediate financial effect for 20th Century Fox appeared minor. Customers won’t be allowed to burn the videos to a DVD or transfer them to an iPod -- only to Windows Media-compatible devices -- which should limit the appeal.

“We’re still in this hazy period where big media companies are not sure of the future, and they want to place a lot of bets on the table,” said Gartner Inc. analyst Allen Weiner.

But more is at stake for Fox Interactive Media, which has faced questions about how it intends to profit from MySpace and IGN Entertainment since it snapped up the Web businesses for more than $1.2 billion last year.

Fox will start testing the service on IGN’s Direct2Drive.com, which attracted 277,000 U.S. visitors in July, according to ComScore Media Metrix. The website is a logical starting place -- its users already pay to download video games, and its technology has powered recent video-download experiments involving “American Idol” songs and “24” episodes on other Fox websites.

“It’s one of those hidden secrets we got in the IGN deal,” said Fox Interactive Media President Ross Levinsohn. “It’s a destination, but the jewel is it’s the platform we need to enable download-to-own.”

After working out the kinks on Direct2Drive, Fox plans to spread opportunities to download TV shows and movies across other properties, with MySpace as a top priority.

Unlike CinemaNow, Movielink, Apple Computer Inc.’s iTunes store and other destination sites, Fox is banking on serendipity to sell video content. MySpace users who find their way to the profile page for the Fox drama “24” can download episodes there, and other shows are expected to follow. Levinsohn said IGN’s Rotten Tomatoes, a movie review site, is also a likely home for film downloads.

“Putting these types of properties in the right places is really the key to getting people to buy them,” Levinsohn said.

He doesn’t plan to limit the downloads to News Corp. His team will court video content from Fox’s rival studios, many of which are already advertising their shows and films on MySpace profile pages.

“Their ability to use this delivery mechanism to get traction for their programming is pretty significant,” said Weiner, the Gartner analyst. “It turns MySpace people into your viral messengers.”