Hollywood’s saviour strikes key distribution deals on US west coast

28 Oct 2008

An Irish technology company that has re-invented the future of movie distribution through key deals with seven Hollywood studios and tech firms, Microsoft, Samsung and Toshiba, has struck further deals with a major US telco and media retailer, siliconrepublic.com has learned.

Portomedia, an enterprising technology company that hasn’t yet taken on any venture capital, will in the early new year begin distribution of thousands of DVD titles onto specially manufactured USB-key styled devices in various retail outlets, initially on America’s west coast.

Each terminal housed in retail outlets such as entertainment stores, filling stations and coffee shops will contain between 5,000 and 10,000 movie titles.

Future Human

Each title is encrypted, and as a blockbuster movie leaves cinema distribution, it is fed into Portomedia’s system.

When a user goes into a store they insert the USB device into the vending machine, enter a PIN number and choose what title they want. Once the user gets home, they plug the USB into a dongle device attached to their TV, PC or games console and enjoy the movie.

“In the changing marketplace retailers need a reason to sell extra products. Movie studios want more distribution outlets and consumers in a downturn want to spend more time at home,” Portomedia founder Chris Armstrong told siliconrepublic.com.

Armstrong was a guest speaker at an Atlantic Corridor conference in Tullamore sponsored and supported by Discover Science & Engineering, Athlone Institute of Technology, Killeshal Concrete, IDA Ireland and Wellwood Healthcare.

“I think the evidence so far is that in terms of movies, rentals and sales go up during the poorer economic times,” Armstrong said.

The USB key device developed by Portomedia comes with two heads that can be inserted into a vending machine, and after paying by credit card or cash, a standard-resolution movie can be downloaded in less than 20 seconds and a high-definition movie within 60 seconds.

Samsung has provided the NAND Flash memory for the device, Toshiba is manufacturing the controller chip and Microsoft will create the digital rights management (DRM) licensing software.

“The problem out there today is that lots of people have digital devices but the ability to get the content they want isn’t clear. Our vision is the device will function as a digital filling station of sorts that will eventually sell movies, games, music and even software from a vending machine.”

Armstrong said that ahead of its US breakthrough, economic conditions have meant that the company will have to make a number of critical choices; either to enter a trade alliance or raise capital to rapidly expand and exploit the market opportunity.

“This decision will depend on new equity and funds. The normal route for this would have been the bank, but unfortunately it has its hands full, to say the least. Even when you look at venture capitalists, they are risk averse.

“We will also be looking at the shareholders who have supported us and have seen their risk mitigated by the deals we have struck. There are people out there who didn’t bet it all on property.

“Despite all the doom and gloom you hear about, there are huge opportunities to grasp.”

Armstrong also believes the Irish Government should be doing more to help early-stage companies and get them seeded. “Venture capital has dried up, private equity has dried up, the banks are looking to the State to bail them out. If Government doesn’t help to seed start-ups, then all start-ups will be heading over the cliff.

“The next generation of entrepreneurs this country so dearly needs are under water with negative equity. There’s no hope for them unless we restructure the market for access to capital and have a different way of funding start-ups,” Armstrong warned.

By John Kennedy

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years