CinemaNow Adds $20 Million

http://www.forbes.com/technology/2006/07/12/internet-movie-download_cx_lh_0713movie.html

CinemaNow, which rents and sells movies over the Internet, said today that it has pulled in $20.3 million from a group of investors led by satellite TV company EchoStar Communications and Index Holdings of Japan.

The Marina Del Ray, Calif., company said the investment doubles the total capital it has raised since 1999. Previous investors Transcosmos, Cisco Systems (nasdaq: CSCO - news - people ), Lions Gate Entertainment (nyse: LGF - news - people ) and Menlo Ventures also participated in the financing round.

CinemaNow Chief Executive Curt Marvis said the money will be used for general corporate purposes, including setting up a service that will allow EchoStar's (nasdaq: DISH - news - people ) Dish Network subscribers to download movies directly to their set-top boxes. The two companies hope to make the feature available by the end of the year, Marvis said.

CinemaNow's cash infusion comes as competition continues to heat up in the market for legal movie downloads.

On Tuesday, Guba.com began offering more than 100 of Sony's (nyse: SNE - news - people ) Sony Pictures movies via Internet downloads; last month, the company started offering Time Warner (nyse: TWX - news - people ) movies and TV shows to rent and to own.

Also last month, Wurld Media's peer-to-peer service Peer Impact began offering a selection of movies and TV shows from both Time Warner and News Corp.'s (nyse: NWS - news - people ) Twentieth Century Fox. Wurld already had an agreement to sell rentable downloads of movies and TV programs from NBC Universal, a division of General Electric (nyse: GE - news - people ).

CinemaNow, which sells both rentable downloads and purchased downloads, already carries movies from all of those studios, as well as from the Walt Disney Co.'s (nyse: DIS - news - people ) ABC News, Walt Disney Pictures and Miramax Films; HDNet; Lionsgate Films; MGM; and the Sundance Channel.

Until recently, CinemaNow's primary competition had been from Movielink, a similar service that is also sponsored by a consortium of movie studios. But neither service has had much luck convincing consumers to rent movies over the Internet. And the competition will get even fiercer if Apple Computer (nasdaq: AAPL - news - people ) Chief Executive Steve Jobs convinces Hollywood to let him sell full-length feature downloads via his company's iTunes online store.

No problem, said Marvis, who added that his company is working on improving download speed and quality.

“It validates, from our point of view, what we've been saying all along, which is that digital distribution of video is going to be a very large business,'' he said. “I'm not overly concerned about those [new] channels of distribution. In all emerging markets, there are a lot of people who jump on the bandwagon.''