Content delivery tied to content generation

Eleven years ago, Ryan Kavanaugh backed a company that devised a way to bring video-on-demand into living rooms. It failed, but he never gave up on VOD.

The CEO of Relativity Media — who racked up thousands of dollars in late fees at vid-rental stores when he was growing up — is especially keen on VOD. He believes there’s untapped riches in the home-delivery platform and would like to capitalize on it. In short, the entrepreneur in him is interested not only in content but in ways consumers can access it.

It was too early for that first failed VOD service — which involved chips in TV sets and a specially designed Earthlink Web browser — but the climate is more hospitable to on-demand movie delivery today.

“Theatrical — no question about it — will always be the platform,” Kavanaugh says. “But VOD, obviously, is the natural progression.”

He predicts the VOD and DVD windows will collapse completely — the process is already under way — with homevideo marketing dollars applied to VOD.

“It is, in my opinion, going to be the biggest driver this business is going to see,” he says.

But current VOD services leave much to be desired. Cable and satellite VOD offerings are difficult to navigate, and most consumers don’t want to sit in front of a computer to watch movies through Internet-based services.

That’s where Kavanaugh comes in: He would like to build a service that makes it as easy to order a movie on your home TV as it is in a hotel room. “I think we would change the business tomorrow,” he says.

The problem, he says, is that change-averse studios fear new technologies could eat away at existing windows, so they don’t embrace them. This happened with VHS, he points out.

“New platforms are always scary, as everyone is concerned they will cannibalize the pre-existing ones,” Kavanaugh says. “History shows that every new platform has grown the business exponentially, and I believe VOD will be no different.”

Kavanaugh is also looking into ways to improve digital distribution of movies to theaters, lamenting the millions still spent on physical prints. His other big digital initiative — the social media site — has already been launched. Relativity also finally launched a corporate site earlier this month, replacing a placeholder page with a rich overview of the company’s many interests.

In Kavanaugh’s view, content delivery feeds the content business itself. “It all ties together,” he says. “We’re trying to find new and innovative ways to deliver content to the end user and continue to increase profit mechanisms.”

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