After nearly two years in production, Hollywood-backed Movielink is giving the green light to its online movie rental service.
The Web site, a joint project of Metro-Goldwyn-Mayer, Paramount Pictures, Sony Pictures Entertainment, Universal and Warner Bros., will debut Monday with a limited selection of first-run and classic films from the five major motion pictures studios, in a test of the technology to select U.S. residents. Though the film studios have licensed content to other video-on-demand sites, it is the first time they've introduced a service of their own.

"With more than 25 million broadband residences, we believe the market is now ready for the launch of a new Internet movie rental service," Movielink CEO Jim Ramo said. "This is the rollout of the service, but it's a real launch in the sense that consumers can rent a movie."

The new venture faces many obstacles. Consumers' demand for viewing films on the PC has paled in comparison to their passion for digital music, largely because of technical limitations in the speed, performance and aesthetics needed to download and watch digital movies. Though adoption of broadband is growing, many people's Internet connections do not provide enough juice to make film-viewing online palatable.

The studios could also face antitrust scrutiny. Rival video-on-demand service Intertainer has filed suit against the studios and Movielink for alleged collusion to restrict contracts with rival services and buy time until the studio-backed site launched. With about 140,000 subscribers, Intertainer closed last month, citing pending litigation.

In addition, federal regulators in the past have frowned on collaborative efforts. For example, a joint venture among several Hollywood studios to introduce a cable TV station incited regulatory concern, causing the partnership to break up.

Still, Movielink aims to present consumers with a legal option for watching movies on the PC, rather than turning to file-trading communities that contain stolen copies of films or unsanctioned movie-rental sites operating overseas. The entertainment industry has been haunted by digital piracy through file-swapping sites like now-defunct Napster and Morpheus. As a result, the industry seeks to preempt the troubles that hit the music industry through peer-to-peer communities.

Illustrating wider attempts to quash piracy, the Recording Industry Association of America (RIAA) and the Motion Picture Association of America (MPAA) sent letters to more than 2,000 colleges last month, warning them that students were using school networks to trade illegal file copies. Although the letters didn't overtly threaten legal action, they did ask the schools to make a "substantial effort" to stop such trading.

For now, Movielink's store will debut with about 200 titles, including first-run and classic films such as "A Beautiful Mind," "Harry Potter and the Sorcerer's Stone," "Pyscho" and "Breakfast at Tiffany's." The company plans to add more films that appeal to its audiences after its initial test.

Prices for films vary from $2.99 to $4.99 and are set by the individual studio. First-run films will appear on the site after they are out on home video, but before they hit pay-per-view television.

After choosing a film and paying for it by credit card, viewers will download it to their computer's hard drive, where it can live for up to 30 days. However, once the consumer hits play, he has 24 hours to watch the film as many times as he wishes before it will expire. People can watch movies in letterbox format--in which the film runs full width with black horizontal bars above and below the image--or in full-screen format.

The download speed depends on the users' connection, but with a cable modem at a maximum of 3 megabits downloads take about 17 minutes. With a DSL connection at 280 kbps it would take about an hour and a half.

The Web site is accessible only to U.S. residents who have a broadband connection with a minimum speed of 128 kbps. In addition, the computer must be running Windows 98, 2000, ME or XP operating systems, with 2 GB of free hard disk space available. The site supports only Internet Explorer 5.0 or higher browsers.

In addition, viewers can use either Microsoft's Windows Player 7.1 or RealNetwork's RealPlayer 8.0. Two weeks ago, Movielink partnered with both RealNetworks and Microsoft Windows Media to use their digital rights management technology and media player platforms.

The company is testing the service for 90 days, taking in consumer advice and trouble-shooting the technology. After that, it expects to publicize the service widely through online marketing, including e-mail and online advertising. Each studio is providing content non-exclusively. Movielink intends to license films from other production houses, but has yet to announce any deals.