I didn't think Movielink had it in itself, to be honest.
Monday's announcement that it's teaming up with Sonic Solutions (NASDAQ:SNIC) to provide DVD-burning capability of its online streaming service is bold. It's brazen. It's not what one would expect from a company bankrolled by the major movie studios.
Even though the company has won Hollywood's support over the years, I never took Movielink seriously. I pretty much viewed it as the celluloid version of what happened to MusicNet and Pressplay in the prerecorded music industry. That was a case of the major record labels putting pride ahead of functionality and ultimately missing the mark on what consumers wanted.
Maybe it's different this time. Even if most will probably agree that Movielink is out of its rocker in charging between $20 and $30 for these downloads, the ability to burn copy-protected DVDs from digital downloads is huge.
If you are a company that pitches Hollywood eye candy -- like Netflix (NASDAQ:NFLX) on the rental front, Apple (NASDAQ:AAPL) on the download front, or Amazon.com (NASDAQ:AMZN) on the retail front -- Movielink just became a bullet-point priority to address at your next strategy meeting.
Birth of a flawed model
No one has ever argued against the ease of music downloads. At just a few megs apiece, the downloads are fairly quick to retrieve. They are also portable and can lighten up the mood while you're sitting in front of the PC.
Feature-length video has been a different story. These are longer downloads, and you will probably never hear your significant other say, "Honey, you nuke the popcorn, and I'll gather the kids around my 17-inch monitor so we can all catch Lilo & Stitch."
It was the lack of legal CD-burning capability that doomed the initial incarnations of MusicNet and Pressplay under the tenuous watch of divided record labels. Being shackled to the PC could have sealed Movielink's fate as well. Even when Movielink announced that it was exploring the possibility of making its flicks playable in conventional DVD players three months ago, it seemed more like lip service and vaporware than a commitment to relevance.
It's only natural to remain skeptical until Movielink and its studio partners are in agreement and launching DVD functionality. Companies that are threatened by this move have no choice but to react, and react sooner rather than later.
From pray to prey
I'm a huge fan of Netflix. I live for the red mailers. I have been a subscriber -- and a happy shareholder -- since 2002. Now that Netflix has proved that it can remain profitable in a price war with Blockbuster (NYSE:BBI), the one gray cloud looming is the eventual reality of video on demand.
It exists already, of course. It's just flawed in either breadth or convenience under most applications. Movielink's new approach changes that. One can argue that Movielink's DVD-burning business is no match to Netflix. A month of unlimited rentals through Netflix will run you considerably less than a single purchase on Movielink. That's true, but Movielink also offers digital rentals, and the line between today's availability and future possibility just got blurred.
Amazon and mainstream DVD retailers will also have their hands full with Movielink. Whether it's waiting a few days for Amazon or driving out to the nearest consumer-electronics superstore, a couple of passive hours to download a movie and burn it suddenly seems feasible. The sticking point here is whether Movielink films will embrace the special features that make DVDs so content-rich, even if it means adding to download and burn times.
Apple won't catch a break, either. The same flicks that studios were earmarking for video-enabled iPods will now be a compelling purchase through Movielink. Apple has emphasized shorter films, shows, and music videos, but it's about more than just that. Apple doesn't want to lose the iPod faithful to older platforms like CD and DVD players. It also wants to remain the dominant player in digital distribution.
Is Movielink powerful enough to topple any of these established growth stocks? Probably not, but it will certainly challenge them. Theater operators may also feel the pinch. Studios have been debating shortening the gap between theatrical releases and home releases, and now they have both a gateway to reach film aficionados and the technology to make home delivery somewhat practical.
You've got my attention, Movielink. Don't squander it.
Netflix and Amazon have both been recommended to Motley Fool Stock Advisor newsletter subscribers.
Longtime Fool contributor Rick Munarriz is a Netflix shareholder and plans to stay that way. T he Fool has a disclosure policy. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.
