CinemaNow steps up iTunes competition in video deal

July 25, 2007, 8:49 AM UTC
Fortune

CinemaNow today announced that it has licensing agreements with Sony BMG, EMI, and Sanctuary Records to offer music videos and concert performances on its Web sites. Starting in late August, CinemaNow will offer video downloads from artists including Lily Allen, David Bowie, Coldplay, and Gorillaz on both it’s CinemaNow and WatchMusicHere sites.

The question, though, is whether this is too little, too late. Apple (AAPL)’s iTunes has become the clear leader in downloadable audio and video content, and the company has recently moved to extend the influence of iTunes beyond the PC through its Apple TV and iPhone offerings. Companies like CinemaNow, which is a pioneer in downloadable video, have a hard time competing with Apple’s installed base and marketing muscle.

At the same time though, Hollywood executives are clearly uncomfortable with the digital power now concentrated at Apple headquarters in Cupertino. A Hollywood production executive told me earlier this year that this discomfort is a big reason why more studios have not signed up to put their movies onto Apple’s iTunes service; they will do it eventually, but they want to nurture more distribution channels first to avoid giving Jobs too much power.

More from the CinemaNow release:

With these agreements, CinemaNow and WatchMusicHere.com will offer more than 6,000 videos from SONY BMG, EMI Music, Sanctuary Records and Warner Music Group, making the site one of the largest distributors of downloadable music videos from major recording labels. The selection will also include uncut European versions of select music videos as well as concert performances from around the world. Music videos will be available for purchase on a download-to-own basis for $1.99. Select live performances and long-form videos will be available for purchase on a download-to-own basis from $9.95 – $14.95 and on rental basis from $2.99 -$3.99, all in the WMV format. …

CinemaNow is integrating its service capabilities with more devices than any other online video provider to ensure that videos can be easily accessed via PCs, set top boxes, game consoles, and portable media players, all with the ability to connect to TVs. The site is compatible with the latest WiFi media players from ARCHOS, which enable users to wirelessly download CinemaNow videos directly to their media players and stream them to their TVs. CinemaNow is also integrated with Hewlett Packard’s (HPQ) upcoming line of MediaSmart LCD TVs, which enable users to rent or purchase CinemaNow movies from their couch. The MediaSmart TV connects to a customer’s home network either wired or wirelessly, so that a user can use their remote to purchase or rent a movie from CinemaNow, download the file to a designated hard-drive within their home network, and watch the video directly on their MediaSmart TV.

The media battle with Apple isn’t necessarily a do-or-die; Microsoft (MSFT), Cisco Systems (CSCO) and Blockbuster (BBI) are among CinemaNow’s investors, which would seem to offer the company more than a couple of potential exit strategies.