Starz Unveils Movies on Demand From the Internet

Starz Encore Group will unveil today a new feature for its cable TV movie channels: the ability to download movies via the Internet and watch them on demand.

The Englewood, Colo., company is teaming with RealNetworks Inc. of Seattle to provide a new, legitimate source of Hollywood movies online, following in the footsteps of such start-ups as CinemaNow of Marina del Rey and Movielink, a joint venture of five studios. The main competition for all these services is online file-sharing, which lets consumers find and download digital copies of movies for free.

Internet movie services have limited appeal today -- it can take hours to download a bulky digital movie file, and for most consumers, the only way to watch a downloaded film is to sit in front of a computer. But the announcement from Starz is another sign that mainstream entertainment companies are starting to view the Internet as a viable way to distribute movies, not just promote them.

A key factor for online movie services is the spread of high-speed, or broadband, Internet connections. By mid-2002, an estimated 16 million people in the United States had high-speed Internet connections at home, which typically deliver a movie 10 to 20 times faster than a dial-up modem can.

Even with a high-speed link, downloading a movie can take longer than a round trip to the video store. On the other hand, consumers don’t have to leave their homes to rent or return a downloadable movie, nor do they have to worry about late fees.

John J. Sie, chief executive of Starz, said the new “Starz on Demand” service -- expected to roll out in the spring -- could expand that potential audience by prodding more consumers to switch to high-speed Internet connections. It could help Starz, too, by promoting its premium movie channels and squeezing a few more dollars out of the titles it licenses from the studios.

The on-demand approach lets consumers watch movies on their own schedules: starting, pausing, rewinding and replaying them as if they were on tape.

Starz already offers movies on demand through a few digital cable systems, enabling consumers to watch films on their TV sets with no downloading time. It’s also doing a more limited version for DirecTV customers, storing a few movies at a time on TiVo personal video recorders.

As with the other versions, the new service will be available only to people who subscribe to Starz’s premium movie package on cable or satellite.

For an additional fee, customers will be able to download as many movies as they like from an online library of 100 titles, with about 60 new titles rotated in each month. The movie files will be scrambled to deter people from making permanent copies, storing them indefinitely or moving them to other computers.

Starz’s on-demand service includes movies from Walt Disney Co., Vivendi Universal’s Universal Pictures, Revolution Studios and AOL Time Warner Inc. subsidiary New Line Cinema.

The Starz deal will add the first films to Real’s online programming service, which has drawn more than 850,000 subscribers mainly on the strength of its sports, news and unscripted-TV offerings.