Guba.com: For the first time, an online video site not affiliated with Hollywood can sell movies, TV shows

Guba.com: For the first time, an online video site not affiliated with Hollywood can sell movies, TV shows
By John BoudreauMercury News
Continuing Hollywood's dance with Bay Area tech companies, Warner Bros. announced Monday a partnership with online video site Guba.com to distribute new and vintage movies and TV shows.
The deal is the result of a yearlong courtship started by Guba's co-founder, 33-year-old Tom McInerney, who expects other studio agreements in coming months. People will be able to rent or buy video downloads on Guba, marking the first time a Web site not affiliated with a Hollywood company can offer both movies and TV shows, from new film releases such as ``Syriana'' and ``Harry Potter and the Goblet of Fire,'' to TV shows, such as ``Babylon 5'' and ``The Flintstones.''
The San Francisco company hopes to grow its catalog of titles every month. Television episodes will be sold starting at $1.79 per episode. Movie rental prices start at $1.99 and films released on the same date they are on DVD will sell for $19.99. Older films will be sold for $9.99.
After initially hesitating, Hollywood has rushed into the digital era and is gaining momentum. Analysts speculate Steve Jobs is working to line up a deal to add movies to Apple Computer's successful and trend-setting online iTunes music and video store.
Meanwhile, Movielink, an online service co-owned by five Hollywood studios, began offering download sales of some first-run and older movies in April. Sony and Lions Gate also sell films on CinemaNow, jointly owned by Microsoft, Lions Gate, Cisco Systems and Blockbuster. In May, Warner Bros. announced it had agreed to use file-sharing company BitTorrent in San Francisco to legally distribute films and shows online, though the rollout isn't expected until late summer, a BitTorrent spokeswoman said. And NBC will announce today it will use the video-sharing site YouTube to promote its fall television lineup.
A few giants
Ultimately, giants like Apple, Yahoo and Google, which have enormous audiences, will dominate online video, said Phil Leigh, president of research firm Inside Digital Media. They could use their size to drive for better deals, such as maybe a price of just $10 a movie, he added.
Warner Bros. began to take Guba seriously after it agreed to scrub its site of pirated Hollywood videos, said Jim Wuthrich, senior vice president of Warner Bros. Home Entertainment.
``They worked on cleaning up the illegitimate product in the network,'' he said. ``So it made sense for us to go forward with the deal.''
Said Tim Bajarin, president of research company Creative Strategies: ``If you do not have the ability to prove to Hollywood that you can handle their content securely and guarantee it cannot be pirated, you don't even get in the door.
Entertainment online, though, is very much in its nascent stage.
``I don't know how big this business will be on an industry basis, or for Guba specifically,'' Wuthrich said. ``We are in the experimental state. We are trying different models and different partners. I really don't know where we will be six months from now.''
Studios generally insist video rentals expire 24 hours after they are first viewed. They also will be reluctant to offer movies online before the traditional four-month theater run because that would disrupt longstanding relationships with cinema owners, Bajarin said.
Restricted DVDs
Under the Guba-Warner Bros. agreement, people will be able to make a copy of a video onto a DVD, but, because of industry licensing agreements, it can only be played on the computer from which it was burned. Wuthrich said he hopes consumers will be able to watch the copied DVDs with a DVD player within a year or so.
For McInerney, the Warner Bros. deal is a big payoff, professionally and personally.
About a year ago, McInerney decided the only way his relatively unknown, 8-year-old company could garner the business of studios was to immerse himself in Hollywood's culture. He rented a Beverly Hills penthouse and bought a Porsche 911 to cruise Hollywood Boulevard. To do business in Hollywood, it helps to hit the clubs and social scene. And so he did.
McInerney, an engineer who once worked for Apple and Sony, hopes the deal will increase the visibility of Guba, which had 900,000 visitors in May, according to Nielsen Media Research. (YouTube, the popular video-sharing site, had more than 20 million visitors last month.)
With a license agreement to distribute Hollywood videos, he said, Guba has a stronger business model than its competitors.
``Nobody is going to pay to see a kid falling off his skateboard or a dog riding a bicycle,'' McInerney said.