Canada's largest peddler of big-screen entertainment is expanding beyond concession stands and stadium seats - and into your living room.
On Thursday, Cineplex Galaxy Income Fund will announce the launch of a new digital service that allows consumers to download movies from the Cineplex website directly to their PCs or Xbox 360 gaming consoles.
The launch is the latest addition to the online movie market in Canada, which analysts expect to grow exponentially in the coming years.
That market is quickly becoming more competitive. Apple Inc. has offered movies on iTunes in Canada since 2008, and this fall, popular U.S. service Netflix launched in Canada, offering streaming movies and television shows for a monthly subscription fee. Homegrown subscription service Zip.ca, which operates a rental service through the mail and automated kiosks similar to Netflix's mail business in the States, is also planning to offer online streaming.
Cineplex's new offering works on a different model from Netflix - instead of movies that play online, Cineplex functions like iTunes. It sells movies, which are downloaded and stored permanently on the user's computer. Rented movies are also downloaded, with a sort of digital self-destruct built into the file once it is viewed, or after 30 days, whichever comes first.
The Toronto-based company, with theatres across Canada, is counting on its existing brand presence to push the new online business. Alongside the Coke ads and Coming Attractions in theatres, Cineplex audiences can soon expect to see ads promoting the downloading store.
"We really do touch the customer first in the movie sales cycle, either online when they're buying tickets, or in our theatres. So we think it's a logical extension of our brand," said Cineplex spokeswoman Pat Marshall.
The company has sold DVDs and Blu-Ray discs through its website since 2008. The digital movies will rent for $4.99 for new releases and $3.99 for the rest of the catalogue, and sell for $19.99 for new movies and $9.99 for older titles. Cineplex has negotiated deals with the studios to make its digital movies available on the same day DVDs are released.
Cineplex has been forecasting for some time that the service would be launched late this year. In an interview following the release of the company's earnings last week, chief executive officer Ellis Jacob said he wants to "create a destination for movie audiences," whether in the theatre or at home.
But watching a movie on a computer screen is not an appealing option to many viewers - and they may not own the XBox system required to get the movies on to their TV sets. Cineplex is planning an upgrade to the system next year to spread the content across a wider variety of devices from different manufacturers.
Basically, films will be stored online through a cloud-based system and viewers will be able to access them from any screen, such as a laptop or tablet device, with a proof of purchase. The system, known as UltraViolet, will be part of the Cineplex download service in 2011. And as Web-compatible television sets come to market, it will be easier to access downloaded movies on the television screen as well.
Cineplex belongs to the Digital Entertainment Content Ecosystem, an attempt by movie studios and other industry partners to create a standard system for digital distribution that would allow films to be stored and viewed on any device. Partners in DECE include Motorola, Samsung Electronics, Toshiba, Adobe, and Netflix. All the major Hollywood studios are members except for Disney, which is developing its own system.
Canadian movie industry box-office growth from 2005 to 2009
Compound annual growth rate for video downloads 2010 to 2014 forecasts