November 20, 2009

Revelations Helps Launch DVD-Less Kiosk Biz

He plays majestic screen figures like God ("Bruce Almighty") and Nelson Mandela (the upcoming Clint Eastwood-directed "Invictus"). Can Morgan Freeman's backing help launch a company trying to infiltrate the digital DVD download business?

Freeman and Revelations Entertainment partner Lori McCreary have thrown their financial resources and technical expertise behind Digiboo LLC, a new venture that will allow consumers to rent films by plugging in a small, portable USB 3.0 flash drive into kiosks that will be set up at retail outlets beginning in January.

Run by CEO Richard Cohen--former MGM Home Entertainment and Consumer Products president--the L.A.-based Digiboo launches a pilot program in January with Oregon-based Movie Gallery Inc. that will see 100 digital movie kiosks operate in Hollywood Video and Movie Gallery retail stores, with plans to expand into airports, coffeehouses and college campuses.

While Revelations partners Freeman and McCreary are best known for feature film pursuits--she and Revelations are producers of “Invictus"--they have long experimented in hi-tech ventures.

Samuel Edge, the CEO of Digital Revelations, will become Digiboo’s Chief Technology Officer and will be involved day to day in the new venture. Revelations’ last tech venture was the digital movie-store ClickStar, a joint venture between chipmaker Intel and Relevations that launched at a time when consumers might not have been ready for digital downloading.

McCreary and Edge said things are changing. Downloads are speedy and easily played on home entertainment devices. Their involvement in the venture came from continuing dialogue with Intel.

“We were invited by Intel a year ago to help put together a technical strategy to distribute digitally, using USB as the medium,” Edge said. “USB 3.0 is remarkable for its portability, and the ability to walk to a kiosk, and walk away in eight to 15 seconds with a movie in your pocket.”

Digiboo joins Blockbuster on the battleground of this fledgling film rental technology, which eliminates DVDs in favor of downloads that can be played on computers, mobile phones, netbooks, televisions and other home devices.

While Blockbuster reportedly will launch its program using SD cards, Digiboo chose USB 3.0 technology, which the company says are already compatible to computers and can be adapted to other devices with an installed base device. An 8 GB unit holds up to four movies, with rental periods expiring at the end of 3-day windows, and copyright protected by digital rights management technology.

It is inevitable to compare any new video venture to Redbox and its $1.09 per day DVDs that have shaken up Hollywood.

Digiboo won’t beat that price—Cohen said that price point will vary during the pilot program, but will likely be comparable to the $3.50 to $5.50 that Hollywood Video and Movie Gallery charges for rentals. But Digiboo kiosks will offer more than 1000 movies and TV shows for rental and sale, he said, and the download system eliminates the need for a trip to return a DVD.

“We don’t have any fantasy of knocking Redbox out of the box, because DVDs will remain a successful business for a good long time,” Cohen told Daily Variety. “The marketplace is very big, and there’s room for Redbox, Netflix, Blockbuster, Hollywood Video, and us. Each serves a portion of a market that sometimes overlaps. For people who want a $1 a day rental, we’re not the better alternative, but we believe we offer sufficient benefits, including portability, to achieve a meaningful marketshare. Newer televisions are being built with USB ports, and we’re working with a manufacturer on a relatively inexpensive unit that will adapt other televisions. The netbooks that have become so popular won’t ever be able to play DVDs, but they are equipped to handle USB.”

Aside from his MGM stint, Cohen was CEO of DVD kiosk company TNR Entertainment and also former exec veep in home video for Disney. He formed the company last year with Jeff Karbowiak, Blake Thomas and Eric Villette, who were also senior MGM Home Entertainment executives. Funding, he said, comes from a variety of investors in the U.S. and Europe, and he said that Revelations has become its most prominent investor, with McCreary joining the Digiboo board and Edge playing a key day to day role in the company.

He declined to say if Freeman will use his iconic industry status to help win studios over into supplying their titles to the new venture.

“They bring enormous credibility and intelligence to the company and validate the approach,” said Cohen, who said he’s in ongoing negotiations with studios to supply product, but was confident that the kiosks would be well represented with a wide selection.

Posted by staff at November 20, 2009 10:40 AM