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Strategies & Market Trends : Rande Is . . . HOME -- Ignore unavailable to you. Want to Upgrade?

To: Kanetsu who wrote (50182)	4/6/2001 9:59:45 AM
From: American Spirit	Respond to of 57584

Big move being made by VZ. "Verizon dialing studios to deal for VOD MGM, Warner Bros. expected to be first in line Verizon has found a lucrative way to get Hollywood to answer its call. Every major studio is set to meet with industry giant Verizon next week at the Beverly Regent Wilshire Hotel as the telephone company attempts to become one of the biggest players in the video-on-demand arena. Execs from several studios have already seen a preliminary demonstration of the TV-based movies-on-demand service through a high-speed DSL phone line; some are impressed enough that they expect to reach an agreement to provide movies to Verizon within a month. The first two are expected to be MGM and Warner Bros. Sony, which has added Universal, MGM and Paramount to the list of strong potential partners along with Warner for its long-awaited MovieFly movies-on-demand service via the Internet, is also meeting with the telco. Verizon will be making its pitch over three days of back-to-back 2½-hour meetings with every studio and several independent movie suppliers, Lions Gate among them, beginning early Monday. The Verizon offer has even attracted Disney and News Corp., which have been standing on the sidelines while other studios have been signing non-exclusive VOD deals. Verizon has already completed market tests of the service in Washington, D.C., and has placed tens of millions of dollars in orders for set-top boxes so it can begin a rollout of the service to high-density apartment and multiple-dwelling units as early as June. Verizon grew out of the merger of GTE and Bell Atlantic and is making the move in the entertainment arena as a way to protect its interests in its core voice and data markets, where digital cable systems have started to make inroads by packaging advanced video services with telephony. That situation has become so alarming to Verizon that the company is offering studios upfront sign-up incentive fees in the millions of dollars and is even offering to pass through the entire transaction fee for each movie purchased by consumers. The offer is almost too good to be true; studios would have little or no cost since Verizon would run and maintain all operations. Typically, the split between the studio and the service provider for transaction fees on VOD systems runs somewhere from 50-50 to 70-30. The telephony market has always been far larger than the cable TV market. Verizon, with $8 billion in net income in 2000, has the largest local phone line footprint in the U.S. of any telco with a so-called last-mile connection to 98 million consumers in 31 states. But the service being pitched is a self-contained system that would be delivered directly to TV sets through a set-top box built by Fujitsu-Siemens Computers. Operating system comes from Bellevue, Wash.-based Stellar One. Deal could hurt utility giant Enron's efforts to attract the attention of studios as partners for its service that had been a joint venture with Blockbuster until the two parties split last month when Blockbuster was unable to deliver studio content. Several studios have said that Enron has since come back with a much more enticing offer without Blockbuster in the mix, with one saying it may sign an agreement with Enron within a month. But that studio said it would also likely sign a deal with Verizon. Although there had been some talk of Enron and Verizon teaming up since Enron is using Verizon phone lines for its market test in Manhattan, sources said that if Verizon's meetings go well with studios next week, there would be little incentive for Verizon to bring in Enron as a partner.