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Software Provides DVDs on Demand

Sonic and Macrovision's program would enable retailers to download and burn films legally.

October 10, 2006|From Bloomberg News

Sonic Solutions, a maker of CD and DVD copying programs, and encryption software maker Macrovision Corp. said Monday that they would provide retailers with technology to download films and sell them on DVDs on demand, freeing up warehouses and shelf space.

Macrovision and Sonic are the first to offer software that uses digital downloads of films from Hollywood studios to create copyright-protected DVDs with artwork and bonus features. Buyers would get a physical copy of a movie that can be played in home DVD players.

With the software, retailers could download specific films requested by customers, who can place their orders online. The DVDs would then be delivered by mail or picked up at in-store kiosks similar to those used to print photos from digital cameras, said Kurt Sherf, an analyst at Parks Associates.

"Because of shelf space limits, retailers can't stock all the titles consumers want," said Sherf. "This would let retailers stock the titles that sell the most and still have a kiosk that could provide thousands of more films."

Macrovision and Sonic said they were negotiating with several retailers and hoped to announce agreements by the end of next quarter.

The software could also be beneficial to movie studios. Only 25% of titles in studio vaults are made available on DVD because three-quarters of the films wouldn't attract enough buyers, Sherf said.

"The vast library of content has not been released because of the cost involved," he said. "Studios have to produce DVDs by the millions, and it's impossible to do that for every film."

Movie studios could make more money from their film libraries, and the movies in their vaults would become more valuable if retailers could offer them on demand.

Pricing of on-demand films would probably be similar to those mass-produced by the studios, said Tim Hogan, Sonic's vice president of digital pictures.

Studios have a hard time predicting how many DVDs to ship and often make too many, said Corey Ferengul, vice president of solutions and strategy at Macrovision. Retailers often have to ship copies they can't sell back to studios, which are forced to hold onto the films.

Shares of Santa Clara, Calif.-based Macrovision fell 24 cents to $26.21. Novato, Calif.-based Sonic gained 62 cents to $15.35.

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