Contact: Click Flicks

by Wayne Friedman, Aug 30, 2005, 3:27 PM

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Clickstar, the joint venture of actor Morgan Freeman's Revelations Entertainment and Intel Corp. created to sell movie downloads online, adds yet another wrinkle to the business of content distribution. Unlike other players in this market, such as Movielink.com, Clickstar plans to release first-run DVDs on the Web at the time of theatrical release, "along with artist-created content that may otherwise not have gotten into movie theaters," according to an Intel spokeswoman. But movie marketing analysts wonder what a relatively small film production company and a computer chip-maker really bring to the party.

"What does Intel make? They make chips," notes one studio Internet marketing executive. "They are not a consumer services company. We need an iTunes solution. It shouldn't be a studio. It shouldn't be a Hollywood player."

Media analysts believe Apple or a major cable operator such as Comcast, or even TiVo, would make a better distributor of movies on the Web - companies that are already acquainted with distributing entertainment content to consumers. "

The chief concern for major movie companies that are considering selling movies over the Web is the elimination or squeezing of existing revenue windows - theatrical, DVD, pay-per-view, pay-television - to make way for movies via the Internet.

"You are taking all bites of the apple at once," says another movie marketing executive. "What if we released a 'Wedding Crashers' movie [on the Internet the same] day and date as [the] theatrical [release]? What do you think Regal Theaters would say?"

Theatrical movie window issues are already heating up. In Germany, for instance, the DVD release of Walt Disney's "Herbie: Fully Loaded" was scheduled too close to its opening theatrical date. As a result, movie chains decided not to show it.

Clickstar is not helping with this issue, since its window of availability is identical to the theatrical release date. Meanwhile, analysts say Intel has a more immediate business focus for encouraging movie downloads via the Web.

"Intel is finding motivation that gives anyone more reason to use wireless chips in the laptop," says Hanlon. "Video delivery is largely tethered to the broadband contention. Wireless is now the open pipe."

Of course this has consequences for other entertainment distributors. "They are bypassing traditional outlets like cable operators," says Brad Adgate, senior vice president and corporate research director for Horizon Media, New York.

Yet more traditional media might win out after all, especially since TiVo already has brand recognition among consumers when it comes to on-demand entertainment.

TiVo recently made a deal with Netflix, the online DVD rental provider, to create a service where consumers could order DVDs online. Marketing experts believe storing movies on personal video recorders, or on the servers of a company such as Netflix, could be a better model for selling on-demand movies.

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