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Vudu Casts Its Spell on Hollywood

Monty Solomon (
Tue, 1 May 2007 02:13:16 -0400

Vudu Casts Its Spell on Hollywood

The New York Times
April 29, 2007

FOR the last two years, the employees of Vudu Inc. have quietly toiled
in a nondescript office in Santa Clara, Calif., in the heart of
Silicon Valley. The only hint of the company's plans are
black-and-white Rat Pack photos that adorn its walls and oversized
models of Gollum and R2D2 that watch over its cubicles.

Insiders familiar with Vudu's hidden magic say that this 41-employee
start-up has everything we've come to expect from Silicon Valley: a
daring business plan, innovative technology and entrepreneurs prone to
breathless superlatives when discussing their new offering's possible
impact on the world.

"This is something that is going to alter the landscape," boasts Tony
Miranz, Vudu's founder, of the product he plans to begin selling this
summer. "We are rewriting economics."

Vudu, if all goes as planned, hopes to turn America's televisions into
limitless multiplexes, providing instant gratification for movie
buffs. It has built a small Internet-ready movie box that connects to
the television and allows couch potatoes to rent or buy any of the
5,000 films now in Vudu's growing collection. The box's biggest asset
is raw speed: the company says the films will begin playing
immediately after a customer makes a selection.

If Vudu succeeds, it may mean goodbye to laborious computer downloads,
sticky-floored movie theaters and cable companies' much narrower
video-on-demand offerings. It may even mean a fond farewell to the DVD
itself - the profit engine of the film industry for the last
decade. "Other forms of movie distribution are going to look silly and
uncompetitive by comparison," Mr. Miranz asserts.

It is not only Vudu's disciples who are zealous about the company's
prospects. Every major studio -- except, for now, Sony Pictures
Entertainment -- and 15 smaller ones will make their films available on
Vudu. And film executives largely wax adulatory when speaking about
Vudu. Jim Rosenthal, president of the New Line Television division of
Time Warner, says Vudu addresses "the two major issues that people
think are getting in way of the growth of digital distribution: they
are getting movies onto the television, and they are doing it in a way
that consumers don't have to sit there for two hours waiting."

Despite such high praise, Vudu faces hurdles. It is wading into a
field dominated by heavyweights whose own aggressive efforts to kindle
movie downloading over the Internet have largely failed. There is also
little proof that consumers care much about the wide selection or
instant availability of movies downloaded from the Web, especially if
a movie isn't cheaper than buying a DVD.

Vudu also needs to persuade regular folks to drag another whirring,
electricity-guzzling gizmo into their already-crowded living rooms.
"Three hundred dollars for the privilege of paying another 6 or 10 for
a movie is a high hurdle," said Nicholas Donatiello Jr., chief
executive of the market research firm Odyssey. "Americans do not want
more boxes under their TV if they can avoid it."

Even with such challenges, however, Hollywood itself says Vudu
represents a real breakthrough.

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