FilmOn acquires CinemaNow, pushes into $2B TVOD market

CinemaNow, the transactional video on demand (TVOD) service once owned by Best Buy, has found new life: it's being acquired by FilmOn for an undisclosed amount.

While CinemaNow will continue to operate under its name as a transactional service, FilmOn will integrate its content offerings with those of CinemaNow, Variety reports. FilmOn content, both licensed and original, will be available via the TVOD service, as will the content being created at Hologram USA, the production company acquired by FilmOn late last year.

FilmOn CEO Alki David said in a release that the company is "excited" about the acquisition. "Our goal has always been to advance legal access to great content for the benefit of the consumer. Now we're working with all the major studios and broadcasters to build the future of entertainment together."

Additionally, CinemaNow will become part of the pre-loaded apps on Lenovo PCs as part of the manufacturer's partnership with FilmOn. That expands its wide availability even further – CinemaNow has apps available across several major streaming platforms such as Roku, Chromecast, Sony's PlayStation and Microsoft's Xbox consoles, as well as Apple's iOS and on numerous smart TVs.

Donna Smith will lead CinemaNow as its president. Formerly, she was the company's VP of new business. FilmOn Chief Strategy Officer David Goldsmith will lead the integration of the two companies' platforms.

CinemaNow has a storied history as one of the earliest transactional services available online: founded in 1999 by a group including Cisco, Microsoft (NASDAQ: MSFT) and EchoStar, it was initially sold to Sonic Solutions, which in 2009 made a deal with Best Buy to make it the retailer's online entertainment brand.

Like many other TVOD providers in that time period, CinemaNow struggled to catch on with audiences that were increasingly attracted to all-you-can-binge streaming services like Netflix (NASDAQ: NFLX), and in 2014 Best Buy gave up on transactional and sold the name to Reliance Majestic Holdings. That company also acquired the back-end operations of CinemaNow, according to Variety.

FilmOn's acquisitory moves in the last few months shed light on an interesting strategy by the provider. Already embroiled in a legal battle with broadcasters over the right to stream freely available over-the-air signals to FilmOn subscribers, the company has increased its offerings in other OTT areas. The streaming service has around 1,000 channels segmented by genre, and the company even has an independent TV station available via two U.S. pay-TV operators, DirecTV and Charter (NASDAQ: CHTR).

But TVOD has been a problematic market segment. Can Alki David turn a profit with CinemaNow? While one possibility is that the acquisition is a sort of guarantee to stay in business with plenty of additional streaming options, no matter how the battle with broadcasters turns out, TVOD may also finally be ready for prime time.

Content availability is becoming a big factor in consumers' decisions to sign up for OTT services. As viewers grow increasingly comfortable with the OTT video environment, they may be more likely to pay a rental or purchase fee to get content they can't access any other way.

The U.S. TVOD market is projected to pass $2 billion in revenue this year and experience a compound annual growth rate of 2.92 percent through 2020, according to Statista.

For more:
- see this Variety article

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