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Monday, August 14, 2006

Fox does downloads ... Intel's muddled Viiv strategy ... Google chases content deals

- Fox is making downloadable movies and TV shows available on its Web sites, including MySpace and, according to Chris Gaither of the LA Times. Like the other studios, Fox is starting the pricing at the DVD level - $19.99 for a movie - which is sure not to attract many consumers, since the downloadable movies have all kinds of limitations (they can't be burned to a DVD, for instance). The real strategy here is for Fox to establish a storefront for downloadable content, gain experience selling it, and build up a customer base, so the studios aren't forced to rely on Apple's iTunes to sell their TV shows and movies, as the record labels are. But I do think they're hamstringing themselves by starting their pricing so high. Gaither writes:

    When it launches in October, the service is expected to include movies such as "X-Men: The Last Stand" and "The Omen," for $19.99, and shows such as "Prison Break" and "Bones," for $1.99 an episode. Movies will be available when they're released on DVD, and shows will go online 24 hours after they air.

    Analysts said the immediate financial effect for 20th Century Fox appeared minor. Customers won't be allowed to burn the videos to a DVD or transfer them to an iPod — only to Windows Media-compatible devices — which should limit the appeal.

    "We're still in this hazy period where big media companies are not sure of the future, and they want to place a lot of bets on the table," said Gartner Inc. analyst Allen Weiner.

- What is Viiv? Apparently, it is a souped up PC with Intel inside, designed for watching multimedia content. But that's not all...

Intel has done a pretty poor job of explaining Viiv to people since the campaign began at this year's Consumer Electronics Show; today's LA Times article is an attempt to clear things up. Terrell Yue Jones of the LA Times writes:

    Think of Viiv as a high-tech hose connected to buckets of paint, spraying small canvases around the world. The buckets are video from Intel partners such as India's Eros International, Mexico's Grupo Televisa and the Shanghai Media Group; the canvases are Internet portals such as Yahoo, Time-Warner's AOL unit and their equivalents, or individual computer monitors.

    That hose is to be turned on before the end of the year. Studios and networks can gain revenue by allowing their content to be downloaded or streamed, either for fees or supported by ads.

Is it clear now?

I'm not sure Intel, which does a fine job making chips, really needs to be in the content business...and I wouldn't bank on this strategy lasting for long.

- Google, on the other hand, has slightly better chances in the content biz. Kevin Delaney of the Wall Street Journal writes this morning about how the company is making nice to media companies after several missteps. Delaney writes:

    Last Monday, the Mountain View, Calif., company announced a deal to distribute video from Viacom Inc.'s MTV Networks on the Web and a separate agreement with News Corp.'s Fox Interactive Media division to provide it with search technology and broker advertising. Google has pledged $900 million in minimum payments to Fox under the tie-up. Google also recently said it would license content from the Associated Press news agency as part of a new, unspecified service. And Google has said there are likely more such deals to come.

    Google's improved relationships with media and entertainment companies reflects the confidence those companies have gained in online distribution in the past year, amid rapid growth in Americans' consumption of Web video and other Internet content.

    But just as importantly, it illustrates a coming of age in Google's approach to the owners of content it wants to search. One key development: Google has recruited executives from the media and entertainment industries in the past year to negotiate with those companies. Led by David Eun, a Time Warner Inc. and NBC alum who joined Google in February, these teams are prowling for deals and courting potential content partners with visits to Google's Silicon Valley headquarters.