Vudu Casts Its Spell on Hollywood
By BRAD STONE The New York Times April 29, 2007
FOR the last two years, the employees of Vudu Inc. have quietly toiled in a nondescript office in Santa Clara, Calif., in the heart of Silicon Valley. The only hint of the company's plans are black-and-white Rat Pack photos that adorn its walls and oversized models of Gollum and R2D2 that watch over its cubicles.
Insiders familiar with Vudu's hidden magic say that this 41-employee start-up has everything we've come to expect from Silicon Valley: a daring business plan, innovative technology and entrepreneurs prone to breathless superlatives when discussing their new offering's possible impact on the world.
"This is something that is going to alter the landscape," boasts Tony Miranz, Vudu's founder, of the product he plans to begin selling this summer. "We are rewriting economics."
Vudu, if all goes as planned, hopes to turn America's televisions into limitless multiplexes, providing instant gratification for movie buffs. It has built a small Internet-ready movie box that connects to the television and allows couch potatoes to rent or buy any of the
5,000 films now in Vudu's growing collection. The box's biggest asset is raw speed: the company says the films will begin playing immediately after a customer makes a selection.If Vudu succeeds, it may mean goodbye to laborious computer downloads, sticky-floored movie theaters and cable companies' much narrower video-on-demand offerings. It may even mean a fond farewell to the DVD itself - the profit engine of the film industry for the last decade. "Other forms of movie distribution are going to look silly and uncompetitive by comparison," Mr. Miranz asserts.
It is not only Vudu's disciples who are zealous about the company's prospects. Every major studio -- except, for now, Sony Pictures Entertainment -- and 15 smaller ones will make their films available on Vudu. And film executives largely wax adulatory when speaking about Vudu. Jim Rosenthal, president of the New Line Television division of Time Warner, says Vudu addresses "the two major issues that people think are getting in way of the growth of digital distribution: they are getting movies onto the television, and they are doing it in a way that consumers don't have to sit there for two hours waiting."
Despite such high praise, Vudu faces hurdles. It is wading into a field dominated by heavyweights whose own aggressive efforts to kindle movie downloading over the Internet have largely failed. There is also little proof that consumers care much about the wide selection or instant availability of movies downloaded from the Web, especially if a movie isn't cheaper than buying a DVD.
Vudu also needs to persuade regular folks to drag another whirring, electricity-guzzling gizmo into their already-crowded living rooms. "Three hundred dollars for the privilege of paying another 6 or 10 for a movie is a high hurdle," said Nicholas Donatiello Jr., chief executive of the market research firm Odyssey. "Americans do not want more boxes under their TV if they can avoid it."
Even with such challenges, however, Hollywood itself says Vudu represents a real breakthrough.