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Disney and News Corporation Announce Video on Demand Service

In a not so surprising move, Disney and News Corporation announced they would launch a broadband movies on demand service. According to the companies, the Web site, Movies.com, will launch in early 2002 and will have movie-related information and promotional video content, as well. Specifics of the deal were not announced, however, and no technology partners were named.

Just three weeks ago, the other major movie studios — MGM, Paramount Pictures, Sony Pictures Entertainment, Universal Studios and Warner Bros — announced their own movies on demand service.

"We are excited to embark upon this new venture and see Movies.com as an integral part of News Corporation's overall strategy to expand its capability of digital distribution across the globe," said News Corporation President and COO Peter Chernin. "It will provide consumers with an exciting new way to enjoy films with full-function capability and, while ensuring their easy access to the content, will be an important step toward protecting the integrity of our intellectual property in the broadband era."

Movies.com will also be a new operating company owned equally by News Corporation and The Walt Disney Company. New releases from the two studios will be made available to Movies.com on an exclusive basis for a limited period of time ahead of the traditional pay-per-view window. Additionally, the companies anticipate licensing rights to new releases, library films and other content from third party suppliers.

Disney and News Corporation say that users will be able to access movies through set-top boxes via their cable operator (if it offers a video on demand system), or through the Internet via downloading to a TV or computer.

Still questions remain about both initiatives; such as what streaming or downloading technology will be used and what digital rights management (DRM) systems will be implemented to secure the movies. Another question is audience: Can the studios grab enough eyeballs to actually make money from the content? According to a statement from the companies, they anticipate that more than 10 million homes in the U.S. will be able to access video on demand through broadband Internet or cable.

"With Movies.com, we are creating a new service that takes advantage of advances in technology that will enable consumers to enjoy an exclusive array of their favorite films and other forms of entertainment on demand and in the comfort of their homes," said Disney Chairman and CEO Michael D. Eisner.

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