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A New Spin on Day and Date

2/03/2008 7:00 PM Eastern

What's the price of instant gratification?

Cablevision Systems is hoping movie-mad subscribers will pay five times what it charges for regular video-on-demand titles to get immediate views of blockbusters the same day they're available on DVD.

The New York-area operator this week is planning to launch a new service, Popcorn DVDs On Demand, that offers 24-hour on-demand access to movies the same day studios release them on DVD.

The catch: Customers must buy the VOD view bundled with the DVD, which is mailed to them separately.

Cablevision is offering the service in partnership with Popcorn Home Entertainment, a startup headed by Steve Brenner, a former CEO of In Demand Networks and president of USA Network. Popcorn has negotiated deals with NBC Universal and Warner Bros., and is initially selling about 20 recent releases and related library titles.

PREMIUM PRICE

The service, available to Cablevision's approximately 2.6 million digital cable customers, carries a steep premium. The DVD-plus-on-demand “day-and-date” titles will cost $19.95 — plus a $4.99 shipping fee — compared with $4.95 for new releases the operator offers in the regular VOD window.

But the selling point is supposed to be that the Popcorn service offers movies 30 to 45 days before they're typically available on cable operators' VOD services. New releases currently available through the service include The Bourne Ultimatum, The Kingdom, Eastern Promises and Sydney White. The Denzel Washington-starrer American Gangster will be available on Feb. 19.

Brenner, Popcorn's CEO, claimed results from a “soft launch” last month with Cablevision have been “terrific” and argued that the pricing is competitive with DVDs.

“We've had repeat buyers. People like the convenience of this,” he said, adding: “We're not going to supplant the store sales of DVDs, but it's a very, very big market. The first rule of retail is you make it easy for the customer to give you their money.”

Cablevision, for its part, positioned the service as “a major step forward in giving our customers new ways to quickly and easily purchase goods and services from a wide variety of companies,” according to executive vice president of digital marketing and commerce Patricia Gottesman.

PROVING GROUND

Popcorn is focused on launching the service with Cablevision before approaching other operators, Brenner said.

“We want to prove out the model first,” he said. “If we're going to expand it and roll it out with other cable operators, we're going to have to raise money to market it.”

The service will face some obstacles besides the premium pricing over regular on-demand titles.

Out of the gate, for instance, Popcorn will not offer movies in high-definition formats, either on VOD or DVD.

The service also requires more than a single click of the remote. To buy a DVD/VOD selection through Popcorn, Cablevision customers must sign up on the operator's Web site to provide credit card, shipping and billing information.

Moreover, studios already have been selectively offering operators day-and-date titles.

In late 2006, Comcast and Time Warner Cable tested day-and-date VOD in a few markets with a handful of titles. Comcast, for one, offered on-demand movies for $4 to subscribers in Denver and Pittsburgh the same day as DVD release including Superman Returns and An Inconvenient Truth. The operator was working with Warner Bros., Paramount Pictures, Walt Disney Pictures, NBC Universal, Lionsgate and 20th Century Fox in the trial.

Brenner, however, maintained that studios have no incentive to move up VOD windows for major releases because that would encroach on DVD sales. “Hollywood studios get a much greater amount of money by selling a DVD than renting it,” he said.

Eventually Brenner wants to line up all the major studios to offer every single DVD that comes out: “I want to have a full store.”

Popcorn is “self-funded” by Brenner and founder Tom Schreiber, previously vice president of strategy and corporate development at on-demand programmer Studio 4 Networks. It has fewer than a dozen employees.

DVD fulfillment is provided by Coral Springs, Fla.-based Alliance Entertainment. “We pay for the DVDs from the studios, pay a certain amount to the cable company and hopefully there's something left over for us,” Brenner said.

September