RIP Vongo and ClickStar: Two Pioneers of Digital Movie Delivery

I wrote a piece for Variety today that breaks the news that two pioneering Internet download services, Vongo and ClickStar, have called it quits.

To my knowledge, these are the first two major Internet download services to wave the white flag.

ClickStar had attracted far more publicity than Vongo, given the involvement of celebs like Morgan Freeman and Danny DeVito. (The pic is from the launch of ClickStar at CES 2006. To my knowledge, Tom Hanks was never involved with the site.)

Both sites were worthy experiments... Vongo was the only major site to try to offer consumers all-you-can-eat movies for a monthly price (a pretty reasonable $9.99.) Vongo's parent, Starz Entertainment, is now providing the same service through Verizon for $5.99 a month -- such a deal!

And ClickStar tried to put movies online while they were still in theaters. That never happened, but they did release two movies on the Internet only two weeks after their theatrical runs began. Theater owners hated it. (I write about this experiment in Chapter 10 of my new book "Inventing the Movies." You can read that chapter here as a PDF.)

About the demise of ClickStar, John Fithian, head of the National Association of Theater Owners, told me yesterday:

"We don’t have an opinion on when people do or don’t stay in business. All I can maintain is our traditional belief that the movie business as a whole and movie patrons as a whole benefit from a theatrical release window, where movies come to cinemas for a reasonable amount of time before they go to the home in any format –- be it DVD or download."

That quote didn't fit, unfortunately, into the Variety story.

And I reached producer Holly Wiersma after my deadline last night. She produced "Lonely Hearts," a 2006 movie that starred John Travolta, James Gandolfini, Salma Hayek, and Laura Dern. It was one of the higher-profile movies released excusively on ClickStar.

She told me, "It's a shame. I think ClickStar would've done better if it launched today," since independent producers would be more willing to work with it at a time when distribs like Warner Independent and Picturehouse have vanished. "We need more outlets, not fewer," she said.

In a letter to content providers, ClickStar tried to declare victory.

"Over the last twelve months, our vision for broadband distribution has been confirmed by the marketplace," chief technical officer Sam Edge wrote, citing download sites launched by Amazon, Blockbuster, and Wal-Mart. "With the entry of these well-funded players into our space...it has become increasingly clear that ClickStar needs to align itself with a key partner to operate within the larger ecosystem and serve our core audience...We have decided to partner or sell ClickStar..."

That letter went out on April 2nd. The Corum Group is handling the sale... but nothing has been announced yet.

In Variety: "Studios' Digital Dilemma"

I have a piece in Variety this week that is basically a state-of-the-market report on digital downloading of movies. It argues that Apple is becoming the Wal-Mart of this new medium -- and that that has big implications for studios and independents. From the opening:

Like Wal-Mart, Apple seems to be flexing its muscle to dictate terms to studios and indie producers. iTunes is a digital "big box" store to be reckoned with, and the choices Steve Jobs' company makes and the conflicts it faces will likely shape the way movies are consumed over the next decade.

Internet Movie Marketplaces: Who's Most Likely to Succeed?

Who’ll end up as the Blockbuster of Internet movie distribution?

No one has all the elements in place yet: big audience, vast selection, intuitive design, and a simple way to transfer movies onto portable devices and the living room television.

But here’s my ranking of the five players that are “most likely to succeed” in the business of digital distribution.

1. iTunes Store The big dog. Works for both Mac and PC users, and as of April 2007, had sold 50 million TV shows and two million feature films. New $299 Apple TV device makes it easy to wirelessly transfer iTunes content to a television and view it there. The negatives: no rentals (only download-to-own, at $9.99 and up), no way yet for indie producers to sell their content, no simple way to burn shows or movies from iTunes to a DVD. Also: only a few studios offer features on iTunes, including Disney, MGM, and Lionsgate. Paramount supplies older films -- not new releases. Others have so far been reluctant to cut deals with Apple CEO (and Disney board member) Steve Jobs.

2. Amazon Unbox Unlike iTunes, Amazon Unbox makes movies available for digital rental and purchase. Movies can be sent directly to an Internet-connnected TiVo device for viewing on a TV. While Unbox hasn’t yet built much momentum in the marketplace, Amazon has a built-in advantage over the other players on this list: hundreds of thousands of consumers already trust the company with their payment information, and have Amazon accounts already. Amazon can also make movie recommendations based on past purchases. Indie producers can make their content available on Unbox using Amazon’s CustomFlix service, and keep 50 percent of the revenues. That makes Unbox the most “long tail”-friendly movie service. Among the studios offering features: 20th Century Fox, Lionsgate, Universal, Paramount, Sony, MGM, and Warner Bros. Movies from Lionsgate, Sony, Warner Bros., and Fox. Works well with Windows-compatible portable devices like the Creative Zen Vision. PC only.

3. CinemaNow CinemaNow has been in the movie download business longer than most anybody else: since 1999. It helped pioneer technology to download a movie and then burn it to a DVD (more than 100 titles are now available, mostly older movies), and CinemaNow also hasn’t been prudish about offering “mature content,” working with porn providers like Vivid and Hustler. CinemaNow is the only service working with all six major Hollywood studios. Offers some movies for free, as ad-supported streams. Movies can get to TV with a Windows Media Center Edition PC, and to Windows-compatible portable players. PC only.

4. Vongo Vongo is unique in offering an “all you can eat” movie service for a dirt-cheap $9.99 monthly fee. About 1000 movies are available at any given time, but some titles rotate in and out of inventory. Works with various Windows systems (Media Center Edition, Vista Ultimate, Xbox 360) to display content on a TV. Content can also be synced with Windows-friendly portable media players. Vongo also offers a live, streaming version of the Starz TV channel. Rental only, PC only.

5. Microsoft Xbox 360 Video Marketplace Microsoft has sold more than 10 million of its Xbox 360 gaming consoles, as of December 2006. The video marketplace offers standard-def and high-def features from Warner Bros., Paramount, Lionsgate, and New Line. (As of April 2007, Xbox and CinemaNow are the only of these services offering movies in high-definition.) Rentals only; no download-to-own. High-def new release movies cost $6, and standard-def new releases cost $4. Since the gaming console is already connected to a TV, viewing on the big screen is a breeze.

Dark horses (in no particular order) MovieLink: Initially launched as a joint venture of several major studios, but never well-promoted. Blockbuster is reportedly interested in acquiring Movielink – which could help introduce the service to a wider audience, especially if Blockbuster ties in digital downloads with rentals from its retail locations. ClickStar: Offers both rentals and downloads. Some movies, like “10 Items or Less,” will appear on Clickstar just a few weeks after their theatrical debut. Biggest things ClickStar has going for it: the involvement of Morgan Freeman and his producing partner, the supremely tech-savvy Lori McCreary. Netflix: Digital downloads are now built into Netflix’s monthly subscription package. About 1000 titles available, which could grow to 5000 by the end of 2007. Streaming only, PCs only. Wal-Mart: Expect Wal-Mart to offer the cheapest prices, if not the most compelling user experience. Launched in February 2007. Joost: Viacom announced a deal in February 2007 to make movies from Paramount and MTV Films available on Joost. BitTorrent: Download or rent movies from Fox, MGM, Paramount, and Warner Bros. Bit Torrent’s advantage is zippy peer-to-peer download speed. GUBA: Partnerships with Warner Bros. and Sony.

Some other comparisons of Internet movie marketplaces:

TechCrunch (good pricing comparison)

ExtremeTech

ShoWest opens in Vegas ... Eisner dips into Web content production ... What's happening at ClickStar?

- Gregg Kilday of the Hollywood Reporter is blogging from ShoWest in Las Vegas, the annual conclave that brings together theater owners, studio execs, and lots of vendors. The Reporter also has a few ShoWest stories: Dolby's new 3-D system will compete with the system made by Real D. (Here's Dolby's press release.) A satellite services company called Microspace will be beaming the feature 'Disturbia' to ShoWest for a Tuesday screening. And finally, NATO head John Fithian admits he was wrong about the revenue potential of digital 3-D:

"I'm willing to accept the fact that I was wrong because I did not believe that 3-D would be as big of a catalyst as it is now," John Fithian, president of the National Association of Theatre Owners, said in The Hollywood Reporter's ShoWest roundtable. "3-D is becoming a much bigger value add than I originally thought. 'Chicken Little' and 'Nightmare Before Christmas' blew the socks off all our members. When you can take a product that's been around for a while and bring it out and make $9 million, that's impressive."

- Michael Eisner is launching a digital content development studio called Vuguru, according to The Wall Street Journal. (The LA Times also has coverage. From the Journal's piece:

"Vuguru's goal is to be the leader in producing high-quality, story-driven content for the Internet that up until now could only be found in movie theaters or on television," Tornante said. [Tornante is Eisner's private investment company.]

"In the past few years, the development of exciting and innovative digital media platforms and technologies has outpaced the creation of truly great content," Mr. Eisner said. "Vuguru will produce and showcase original and third party content in all genres and formats to meet the new demands of the evolving media landscape."

Here's a look at their first project, Prom Queen, which will consist of 80 episodes, each 90 seconds long. It'll show up on Veoh ( a video site Eisner has invested in ), as well as YouTube and other sites. Pretty cool experiment, but one question: how will Vuguru place advertising on the clips it posts to YouTube?

- ClickStar, the site that is a joint venture of Intel and Morgan Freeman's production company, Revelations Entertainment, has split with its interim CEO, James Ackerman, according to Variety. Lori McCreary, Freeman's co-producer at Revelations, will take over as CEO. (ClickStar's original CEO, Nizar Alibhoy, left last January.) Ben Fritz of Variety writes about the next Internet feature ClickStar will release:

Company hopes to get a second boost from "Lonely Hearts," an indie pic that will be available for download at ClickStar on April 27, two weeks after it hits theaters. True-crime story, which Roadside Attractions and Samuel Goldwyn Films are releasing, is written and directed by Todd Robinson and stars John Travolta and Salma Hayek.