Tech firm in lucrative deal to save Hollywood’s bacon

14 Apr 2008

A technology company in the west of Ireland has struck a major deal with six major Hollywood studios as well as sparking a technology alliance with Microsoft, Toshiba and Samsung in a move that will prevent the movie industry suffering the same fate as the music industry, which has been crippled by piracy.

Galway-based Portomedia has developed a new technology that will allow movie lovers to access their favourite movies in an ATM machine-like manner by downloading them onto specially made USB devices with specific rights management entitlements.

The technology will allow the Hollywood studios to get movies to movie lovers faster than waiting for broadband technology to speed up.

Portomedia has developed a USB key device with two heads that can be inserted into a vending machine and, after paying by cash or credit card, a standard resolution movie can be downloaded within 15 to 19 seconds, while a high-definition (HD) movie can be downloaded within 60 seconds.

The US device will come with a docking cradle with two connections – a standard SCART connection or a HDMI connection.

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

Portomedia is the brainchild of entrepreneur Chris Armstrong, a physicist by profession who has worked with Cable & Wireless, BT and Ericsson. The company employs 26 people in Galway and is supported by private investors. Armstrong says the company has taken on not one cent of venture capital.

Armstrong says he got the idea one night three years ago when he was trying to rent a DVD. The DVD he wanted was not available and as he put his rental card back into his wallet he noticed the USB key he kept on his car keys.

“Unlike the music business that didn’t realise what the internet would do to its business, the movie business is aware of the world going digital and doesn’t want to experience the same fate,” says Armstrong. “We decided to follow the money and we believe the money is in retail, another industry that has it all to lose at the moment.

“Effectively this will be an ATM for media. You can buy the USB device for less than US$20 and the plan is you will be able to use it in any petrol station, coffee shop in the world using a PIN the same way as you would to get cash from an ATM.

“We want to do to movie retail what Cuisine de France did to retail. You can rent the movies you want, watch them a number of times and you don’t have to return them. That’s what we’re doing for Hollywood.

“The technology functions exactly like a DVD, except instead of an aluminium disk the movie will exist on a piece of silicon. The difference this time is the movie industry will have far more control over that silicon than giving it to some manufacturer in China.”

Armstrong says the technology is currently being trialled at specific locations in the west of Ireland and will debut in North America and Scandinavia later this year.

“I’m quite proud of the team we have at Portomedia,” Armstrong says, referring to how a three-year-old company can come so far, so fast. “Our investors came in organically. The Irish diaspora in the IT world is hugely influential and we were able to exploit that.

“The movie industry doesn’t see us as a threat but as an enabler. A lot of people didn’t believe me when I presented the idea to them but Samsung, Toshiba and Microsoft got it right away. We were able to convince them we weren’t messing about. We showed them it was possible to make money selling licences and they decided to give us a chance.”

Armstrong said that at present 33 countries worldwide are seeking the rights to deploy Portomedia’s solution. “We have enough capital to make sure this happens and develop the partners in the various countries. Now is the time for the various partners and investors in the next round of finance to take this to the global stage.”

He describes the private investors in Portomedia as a few high net worth individuals from the media and sports world, “plus friends and family”.

“This is a bold step, and it’s a surefire chance for Ireland to play a big role. We have a concept that we intend to exploit on a bigger scale.

“When I told people that I was going to invent the future of the DVD, they thought I was cuckoo!”

By John Kennedy