RealNetworks Gets Reels

RealNetworks Inc. and the cable movie channel company Starz Encore Group are teaming up to offer movie subscriptions over the Internet.

The new service, to be launched in spring 2003, will give subscribers with high-speed Internet connections access to more than 100 movies a month at the same time they are available on Starz' cable channels. Users can download and watch the movies at any time within a limited period, typically as long as they were showing on Starz' cable channels.

The movies are aimed at computer viewing - people who want to watch on a television would need additional equipment.

The companies have not announced a price for the new service, called Starz on Demand on RealOne, but executives said it will cost around $10 a month, similar to what cable customers pay for Starz premium channels.

Other companies, including MovieLink and CinemaNow - backed by RealNetworks rival Microsoft Corp. - also broadcast movies over the Internet for a fee. But RealNetworks' site has the reach and reputation to drive the online entertainment industry forward, said John Fletcher, associate analyst with Carmel, Calif.-based Kagan World Media.

"It's probably one of the most important things that Real has done in terms of getting content that people really value," he said. "Real is the closest thing to an online cable company that there is."

It's the latest incarnation for Seattle-based RealNetworks, which develops and distributes software for playing audio and video over the Internet. The company has been building up a subscription service, called RealOne, with 850,000 users who pay monthly fees to access exclusive sports, music and other entertainment over the Internet.

The company is offering a two-day free trial period on Wednesday and Thursday in a marketing campaign.

Still, Fletcher said, until there are faster broadband connections and better networking technology that allows images fed through the Internet to be displayed with clarity on television screens, the market for movies over the Internet will remain relatively small.

"These are baby steps," he said. "But they're good ones."

RealNetworks Chief Executive Rob Glaser acknowledged that it's unlikely hordes of customers will want to watch movies from the Internet. But he predicted many so-called "early adopters" will sign up.

By Helen Jung