CHALLENGE

In the mid 1990s, the big hot topic was "video-on-demand." All the top entertainment, cable and telecom industry trade magazines ran cover stories on it. Speakers theorized on it at dozens of trade shows. Cable and telecommunications companies spent thousands on various tests in handpicked communities. Everybody held their breath -- would consumers pay for the ability to see the movie of their choice, at the time of their choice, without schlepping out to the video store to rent it? And if so, how much would they pay for it?

Then the Internet got hot and video-on-demand was all but
abandoned as industry analysts focused their projections on this new Web thing that would certainly make everyone billions by 2001.

Video-on-demand was considered either a superceded notion, or something that would come around someday when average
consumers got superior bandwidth. But not until then.

The folks at CinemaNow didn't want to wait for that day. This is their story.

CAMPAIGN

True to Hollywood tradition, CinemaNow's first challenges were contractual negotiations. Director of Marketing Jared Goldsmith explains, "Content owners are concerned with digital rights management, territorial rights management, syndication rights and other rights issues. The film industry didn't want the 'napsterization' of movies."

Ultimately CinemaNow ended up with the rights to sell some films in a subscription package, some on a pay-per-view basis only, some only in certain countries, and some they could offer for free and run ads against.

The Company used the services of geo-intelligence service DigitalEnvoy so all site traffic could be divided by country-of-origin. That way visitors from each country would only see offers for the films CinemaNow had the rights to show them. CinemaNow's management team also invented a unique, multi-tier, offering for visitors to pick and choose from. Many films are available for a $9.95 monthly 'Premium Level' subscription fee. Others are only available as $1.99-$2.99 48 hour rentals. (You can choose to stream the film you've picked at any time during 48 hours.) Others, often short subjects, are available for free as long as the consumer doesn't mind sitting through a few streamed rich media ads first.

Initially CinemaNow assumed its main audience would be young male adults. 20-year old guys with PCs, fast connections and nothing else to do at night. Goldsmith says, "When we launched in December 1999, college-aged males were our main target audience.They have broadband access and they have time. So our content skewed towards a bunch of horror films."

Goldsmith relies on marketing partnerships with sites such as Hollywood.com and WindowsMedia.com to drive new traffic. Deals are on a revenue sharing basis. Partner sites run banners for CinemaNow and special offers in email newsletters.

CinemaNow also launched its own email newsletter for registered site members in January 2001. True to the site, it's completely flash-enabled and includes rich media ads from sponsors such as the TV show 'Blind Date' and Ramada Inn, which just launched a campaign featuring the Mr. Bill character from SNL. Newsletter content includes info on the latest movies available, an interactive poll, and a contest for free DVDs.



RESULTS

More than half a million unique visitors go to CinemaNow.com every month. They choose to stream an astonishing two million+ videos each month, indicating that when people decide to start streaming videos, they like to do it a lot! Although the site offers various streaming speeds, about 70% of registered users have broadband access.

The site is supported 70% by advertising and 30% by visitor purchases. Two percent of registered members have purchased films -- 3/4 of these buy pay-per-view and 1/4 of these are monthly subscribers.

A healthy 43% of Flash email newsletter recipients click through on an ad or a site offer.

The biggest surprise is demographics. While nearly 80% of
CinemaNow registered members are male as predicted, many are older than expected. Goldsmith's theory to explain this is, "A lot of family men, they come home, their kids are on the TV, their wives are watching 'Will and Grace'.... So, the guy logs on looking for some entertainment he'd like."

The most streamed movie in the history of the site is the horror flick, 'Leprechaun,' featuring a pre-'Friends' Jennifer Aniston screaming.