On-demand video box rolls out with 5,000 movies

On-demand video box rolls out with 5,000 movies

By Yinka AdegokeWed Sep 5, 7:53 PM ET

Movie-on-demand service Vudu, which
launched on Wednesday, aims to lure customers from video rental
shops and digital cable television with over 5,000 movies from
major and independent studios ready to download.

Unlike other Internet-based movies services, the
two-year-old Santa Clara, California-based start-up said the
service lets viewers watch high definition films on regular
television screens by downloading them over the Internet.

Movies are stored on Vudu set-top boxes, co-founder Tony
Miranz said.

The Vudu box, which starts shipping to stores next month,
will cost $399 and movie rentals will range from $0.99 to
$3.99. The service will also allow consumers to buy movies from
$4.99 to $19.99 depending on the age of the movie.

The company has licensing agreements with major Hollywood
studios Lionsgate (LGF.N), Time Warner Inc’s (TWX.N) New Line
Cinema and Warner Bros Studios, Viacom Inc’s (VIAb.N) Paramount
Pictures, News Corp’s (NWSa.N) Twentieth Century Fox, Universal
Studios, The Walt Disney Co. (DIS.N) as well numerous U.S. and
international independents.

It will have popular movies like "Dreamgirls" and "300" as
well as numerous classic films.

Vudu comes on the heels of other companies like CinemaNow
and Vongo that have struggled to gain mass appeal in offering
movies on demand over the Internet.

The most prominent name in the sector is Movielink, which
was originally backed by several Hollywood studios for five
years before eventually being sold last month to U.S. movie
rental chain Blockbuster Inc (BBI.N).

As well as competition from DVD rental and online video
sites such as Netflix Inc (NFLX.O), Vudu will also face
pressure from an increasing amount of on-demand movie content
offered on major cable and satellite operators such as Comcast
Corp (CMCSA.O) and DirecTV Group (DTV.N).

Microsoft Corp’s (MSFT.O) Xbox 360 video game console and
Apple Inc’s (AAPL.O) Apple TV device also will fight for
attention from consumers seeking to watch downloaded movies on
TV sets.

"Vudu is being introduced in an area that’s had some tough
history," said Kurt Scherf, analyst at Parks Associates. "It’s
been clear that the movie-on-demand model via the Internet has
so far underperformed Hollywood studios expectations."

However, Park Associates estimates the market will hit $3
billion in annual revenues by the end of 2010.

Co-founder Miranz said Vudu will target a subset of
consumers who seek instant gratification rather than the
mainstream of U.S. TV households.

"We’re providing a better way to rent movies and we are
very much complementary to cable and others. Consumers don’t
want to watch movies on their PCs."

Most new DVD movies will be available to buy as a download
to the Vudu box within 48 hours of release for the same price,
according Miranz.

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