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Movielink, BellSouth unspool online deal

NEW YORK — Hollywood is getting a bit more aggressive about its nascent online movie download efforts.

On Monday, studio-backed movie download service Movielink announced a deal with BellSouth, the first of several new partnerships with “last mile” broadband providers. Telco will offer customized movie rental service to its high speed DSL customers (roughly 1 million), with films priced between $2.95 to $4.99 for a 24-hour viewing period.

Movielink, which is jointly owned by Paramount, Sony Pictures, Universal, Warner Bros. and MGM, has been slowly building its online catalog of downloadable titles since it launched in November with some 175 films. In addition to the studios’ own titles, Disney, Miramax and Artisan films are also available on a nonexclusive basis. Company said it’s currently negotiating for rights to 20th Century Fox titles, which the studio currently licenses to CinemaNow.

Movielink offers a catalog of some 400 film titles, roughly 25% of which are available concurrent with the cable pay-per-view/VOD window (some 30-60 days after video).

Users download films via credit card on the Movielink site. The film will reside on the hard drive for 30 days, but once the title is activated, the renter has 24 hours of unlimited use before the file self-destructs. Movielink CEO Jim Ramo said the company is negotiating with other DSL and cable operators to roll out similar co-branded sites.

Avoid music biz’s mistakes

Determined not to follow in the footsteps of the music industry, which allowed less-than-legal online entrepreneurs to build a huge business in the absence of a legal alternative, Ramo says the studio backers are being proactive.

In addition to myriad pirate sites that are offering up movies, Movielink competes with legit third party providers like CinemaNow.com. Another rival, Intertainer, recently closed down claiming studio pricing made it untenable to continue offering a service.

The BellSouth deal will provide a marketing push for the service, which has so far been largely quiet on the video-on-demand scene. “We have not done a big offline marketing push…it just wouldn’t be efficient at this point,” said Ramo, who noted that only 20 million out of some 105 million U.S. TV homes currently have a high-speed Internet connection.

Ramo wouldn’t disclose exact financial details of the partnership but said BellSouth will get an affiliate fee in exchange for its marketing efforts.

Avoiding the middle man

Each of the studios is believed to have invested up to $30 million in Movielink, which they see as a defensive move against pirates, as well as a future new revenue stream that, like DVD, avoids the presence of middlemen like cable operators. “We think we’ve got five supportive shareholders because they want to open the Internet as a new channel of distribution and provide an alternative to pirates,” said Ramo.

Admittedly, limiting consumption to the confines of a computer monitor does not make the Movielink service an immediate mainstream product, though Ramo says over time he expects to see the Internet better integrated with TV sets.

While Movielink doesn’t disclose traffic numbers, Ramo said the service is growing faster than broadband penetration growth.

Sony’s Qwest quest

Separately, Sony Pictures Digital Networks has inked a marketing agreement with telco Qwest that will package downloadable music, TV shows, games as well as the Movielink service for Qwest’s broadband DSL customers.

Telcos have been getting more aggressive about recruiting broadband subscribers away from their cable rivals. The Baby Bells regard high speed Internet connections as a vital new revenue stream to offset the decline in their core voice business. In recent weeks, SBC and Qwest have also teamed up with DBS provider EchoStar to jointly promote satellite TV and high speed Internet packages as a way to compete directly with digital cable offerings.