Los Angeles Business Journal

TV Fattens Up on a la Carte

ENTERTAINMENT: M-Go looks to make move into home market. By Jonathan Polakoff Monday, September 2, 2013

Still, Cryan said that he believes people are open to new options.

“Consumers can be attracted by competing services,” he said.

Home entertainment sales last year grew for the first time in five years – although only by one-quarter of a percent – to $18 billion, according to L.A. non-profit Digital Entertainment Group.

Growth has been slow because of swooning DVD sales. But subscription streaming services such as Netflix were responsible for much of the gains and contributed $2.3 billion in sales. On-demand rentals grew 11 percent to $2 billion. Digital download sales from services similar to M-Go grew 35 percent to $811 million.

The growth shows that consumers are adopting both methods of watching, Cryan said.

“Subscription TV services are not incompatible with buying and owning content,” he said.

Facing consumers

In launching M-Go, Technicolor is making its first major push into the consumer market. The firm is best known for providing postproduction services for movies and TV shows. It has 1,750 employees spread throughout 19 facilities in Los Angeles and Camarillo, with North American headquarters in Hollywood at the same site as Sunset Gower Studios.

Technicolor has been able to get into the content business with the help of partner DreamWorks Animation. M-Go’s chief executive, John Batter, was formerly the studio’s president of production.

The startup will look to its TV set partners and studios for marketing muscle, Batter said.

“We’ve been piloting a number of programs over the past couple months,” Batter said. “There are a lot of interesting ideas for integration. We’ll be hitting the accelerator in the fourth quarter.”

Last month, Vizio began shipping M-Go’s app preloaded on its new Internet TVs and set-top boxes. New Vizio remote controls come with a designated M-Go button, right next to one for Netflix. That’s seen as a breakthrough.

“It’s a good thing for M-Go to be on Vizio TVs,” said HIS’ Cryan. “Unless you get that device piece (of the puzzle) working, you’re dead in the water.”

Still, entertainment stores such as Apple’s iTunes and Google Inc.’s Google Play are already built in to all Apple or Google devices, he added.

What’s more, people are already accustomed to storing their data and making purchases through those companies, whereas M-Go is still an unknown, he said.

New-release digital movie sales are a historically unprofitable business. Industry insiders believe online distributors including iTunes buy new-release films at wholesale prices from movie studios – for example $16 each – and then offer the titles to customers at a lower price – $14.99 or the like – in order to spur other sales.

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