Paramount's 'toe dip' into content distribution potentially transforming

editor's corner

Jim-O

Paramount Pictures late last week began offering consumers the ability to stream Transformers: Dark of the Moon directly from the studio, disintermediating video services like Amazon (Nasdaq: AMZN), Netflix (Nasdaq: NFLX) and pay-TV operators.

The move shifts more power to content owners looking to maximize returns on their content, and it puts just a little more of a squeeze on middlemen currently making a living off them.

In a nutshell: Paramount has put up a dedicated site for the movie, where consumers can pay $3.99 to watch the movie on a computer as often as they'd like for 48 hours, or $4.99 for an HD stream to machines running Windows. The movie will be available on the site through February. Transformers is only available to view on computers and requires consumers to have Microsoft (Nasdaq: MSFT) Silverlight and a robust Internet connection.

Studios have batted around the idea of going direct-to-the consumer with content before.

In 2009, Sony released its animated hit, Cloudy with a Chance of Meatball via its Blu-ray players and Internet-enabled Bravia televisions before releasing it on DVD. It charged consumers $24.95 for a one-day rental, hoping to avoid creating a chasm between itself and retailers which carry its DVDs. The movie was scheduled to release to DVD 30 days later.

transformers: dark of the moon

Consumers will be able to stream Transformers: Dark of the Moon directly from the studio.

Disney (NYSE: DIS), Warner Bros. and Sony a year ago were talking with In Demand, which is owned by Cox Communications, Time Warner Cable (NYSE: TWC) and Comcast (Nasdaq: CMCSA), about streaming videos days or weeks after theatrical release, rather than months. Disney also was rumored to be looking into streaming movies over other Web-connected devices.

Last month, The Weinstein Co., a 25 percent owner of Starz Media, said it was planning to launch a new film label that would bring new films and other specialty entertainment to audiences" simultaneously on-demand, online and in theaters.

"Our experience in digital distribution has been eye-opening and inspiring; we see it as a new frontier for studios and for independent filmmakers of every stripe," said Tom Quinn and Jason Janego, who will oversee acquisitions, productions and distribution of label content.

Paramount described its current foray into streaming as a "toe dip" experiment.

"We're testing the waters and interested to see consumer feedback," said Amy Powell, EVP-interactive marketing and film production. "It's just a little toe-dip to move in the direction we believe will be one of the future distribution means for content."

Cutting out middlemen does allow the studios to keep more of the rental revenue for themselves, and it gives content owners more control over how their products are consumed.

But, it also creates the need for more infrastructure, as well as a need to create a channel that allows the studio to reach out to fans and market the film. Paramount last week sent out an email through MTV Networks to announce the website.

But, will consumers be willing to pay $5 a view--on a computer screen only? And, will running a streaming service really be a natural fit for Paramount? Or, will it be a distraction, complete with big technical demands and with the potential to alienate a current revenue stream from pay-TV and syndicators?

Regardless of what results Paramount sees from this experiment, it's a very good bet that it won't be the last time content owners dip their toes in this water.--Jim

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