Rovi has announced its acquisition of Sonic Solutions this week, taking over the company known for its DVD editing and burning software, digital movie downloads and for DivX, the digital video software and codec.
The company will pay $720 million in cash and stock just six months after Sonic purchased DivX for $323 million.
Rovi says the merger will help “Hollywood studio clients sell content in a fast-growing digital entertainment market.”
Because the content will be more centralized, consumers may be willing to pay a premium for it, adds the company.
The deal should close in the first half of 2011 and consolidation should help save them $15 million in expenses per year.
Result for: hollywood
Prima Cinema, a new start-up, wants to bring movies to your home movie theater the day that movie launches in theaters, but it won’t be cheap.
The company will charge a one-time $20,000 fee to install the digital-delivery system, and each new movie will cost $500.
Prima says it has $5 million in venture capital from Universal and Best Buy and hopes to begin delivering movies to customers in the Q4 2011.
The company has high expectations, as well. Prima wants to install the delivery system in 250,000 homes by 2015, however, executives in Hollywood seem to see that number as a lot lower.
Other execs see it differently: “While this is a niche market, there is a chance for significant upside,” says Adam Fogelson, chairman of Universal Pictures (via WSJ). “And precisely because it is a niche market, that upside should come without harming any of our existing partners or revenue streams.”
Prima CEO Jason Pang adds: “We’re not here to replace anything. We are trying to create new revenue streams for studios and new viewing opportunities for moviegoers.”
The movie delivery company has not yet signed on with any studios, but is actively in talks with all the majors and major independents.
Result for: hollywood
Despite the massive influx of 3D films, summer movie attendance has fallen to its lowest level since 1997.
On the other hand, however, 3D, IMAX and standard ticket price hikes have all led to record revenue for the studios and theater chains.
Tickets sold from May through Labor Day are expected to drop 2.6 percent to 552 million, almost as low as 1997’s 540.3 million tickets sold.
“The movies just didn’t excite people the way they needed to,” says Paul Dergarabedian, president of Hollywood.com Box-Office. “When you raise prices and perceive that quality goes down, you have a major problem.”
Revenue will set a record at $4.35 billion, a 2.4 percent jump from last year. The average ticket price will increase 5.1 percent from $7.50 to $7.88, thanks mainly to 3D and IMAX showings which cost $3 more, on average.
