LOS ANGELES – CinemaNow Inc., an Internet-based movie service, is a rarity in Hollywood – a company that eagerly embraces Microsoft Corp. technology and relies on it exclusively to transmit, protect and display the movies it rents to customers.
Then again, Microsoft is a major investor in the company, which is also owned by independent studio Lions Gate.
The majority of entertainment companies, unsure of Microsoft’s motives and wary of its cutthroat tactics in the battle for the computer desktop, have preferred to maintain an arm’s-length relationship with the software Goliath.
But these days, studios fear digital piracy more than they fear Microsoft and have slowly begun to make deals to use its software tools, albeit on a nonexclusive basis.
For its part, Microsoft has tried to calm Hollywood’s anxiety, revealing a portion of its proprietary code for compressing large media files to a standards-setting group and offering longer-term deals to assuage fears it would hike the price of each new software version.
“They are being subtly aggressive, not like in the PC industry where they used strong-arm tactics,” said Michael Wolf, principal analyst at research firm In-Stat.
Microsoft also is starting to see limited success in its efforts to work with Hollywood in the still nascent online movie market. Last week, Microsoft’s MSN Internet division began linking to Blockbuster Inc.’s online rental service. MSN also offers a limited number of pay-per-view movies through CinemaNow.
Suspicions still linger, even as Microsoft has struck deals with several studios to protect movies and TV shows from piracy.
Microsoft says it has learned from its earlier, sometimes heavy handed, dealings with Hollywood.
The company recently plucked a Hollywood veteran to run a new division to develop relationships with the entertainment and media industries. Blair Westlake, a former chairman of the Universal Television and Networks Group, will be responsible for bridging the gaps between Hollywood, consumer electronics companies and government regulators.
Amir Majidimehr, who runs Microsoft’s Windows digital media division, said he understands that Hollywood is wary of ceding any of that power to a technology company such as Microsoft. But he adds that recent agreements to work with Disney and Warner Bros. have helped allay Hollywood’s fears.
“Our strategy is very simple – we make money selling Windows, and we want to sell more copies of it. The way we sell more is to add new applications to it,” said Majidimehr.
“What we’re trying to do is be very true to our intentions, which is to drive PC sales. We’ve got to play fair, we’ve got to play open and frankly, we think we’re doing it better than any competitors.”
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