Lions Gate Ent. now takes minority position

Internet video-on-demand company CinemaNow has raised $11 million in a fourth round of funding.

Investment, largest ever for the company, moves former majority owner Lions Gate Entertainment into a minority position. Studio now has an approximately equal stake with venture capital firm Menlo Ventures, which led the new round.

CinemaNow is the second biggest online VOD company behind the five-studio joint venture Movielink. Its content and terms are similar to Movielink’s — save for CinemaNow’s exclusive deals with Lions Gate and Fox — but the company differentiates itself with a strong international presence and a subscription service for independent and softcore adult films.

It has approximately 15,000 subscribers and rents more than 25,000 movies per month on a PPV basis.

Company plans to use the new funds to further grow its content library, technological infrastructure and expand its overseas presence.

Off the ground

“Our mission in 2003 was to prove we could run a break-even business and we did that,” CEO Curt Marvis said. “But we needed growth capital to expand our offerings and technology infrastructure in the U.S. and overseas.”

Domestically, CinemaNow is looking to expand its partnerships with Internet providers that offer its service directly to subscribers, such as its deal with SBC Yahoo. Internationally, Marvis said he wants to expand into Japan and have a stronger presence in Europe.

In the longer term, CinemaNow, like its competitors, is hoping to negotiate terms with studios to broaden the ways it offers their pics to users.

Competitor RealNetworks offers a monthly subscription service for some studio movies thanks to its alliance with Starz!, the pay cable net.

With the new funds, CinemaNow has raised a total of $20 million. Joining Menlo and Lions Gate in the round was tech company Cisco Systems.

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