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CES: Paramount endorses hard drives

Videogiants_logo_2 Here's an unusual first. Paramount Pictures announced a deal Wednesday to let MusicGiants, an online music store that caters to audiophiles, sell collections of movies loaded onto hard drives. Buyers will be able to transfer the contents of those drives onto personal  computers or, more likely, home media servers. The deal marks the first time Paramount -- and probably any major Hollywood studio -- has let its films be a) delivered on hard drives and b) loaded in bulk onto home servers. MusicGiants will also be able to sell downloadable titles one by one through its new online video store, dubbed VideoGiants, although it doesn't plan to do so until later this year.

The agreement is more of a baby step than a flying leap for Paramount. It covers only a subset of the studio's catalog -- just the titles cleared for permanent downloadings, many of which are older ones such as "Mission: Impossible" and "Braveheart." Initially, the movies won't even be in high definition. Nor does MusicGiants pose much of a piracy risk. The movies on the hard drive are encrypted, and they stay that way even after they're transferred onto a home server. Also, rather than trying to compete with Apple's iTunes store, the company has focused on selling pricey encyclopedic collections and pristine quality tracks to high-end customers. The first users of the download store, in fact, are likely to be owners of expensive custom home entertainment systems. The company has deals with the makers of at least eight home-theater companies to pre-install the VideoGiants store software onto their home media servers.

Nevertheless, the announcement is significant for a couple of reasons. First, the industry is still struggling to figure out how to let consumers load media servers -- think of them as audio/video jukeboxes in the home -- with copies of the movies they buy on copy-protected DVDs and high-definition discs. They've been working on a standard approach to "managed copy" for months, and yet there's still no agreement among the studios, tech companies and consumer-electronics manufacturers. Second, don't forget the tale of woe told by Kaleidescape, another company selling high-end home entertainment products. Kaleidescape's CEO, Michael Malcolm, has said he tried in vain to persuade the studios to let his company sell high-priced home media servers with packages of movies loaded onto their hard drives. Despite the fact that these systems had military-grade security and princely price tags -- the least expensive system sold for about $25,000 -- Kaleidescape couldn't win over the studios. So it found a clever way to record movies off of the DVDs its customers bought, prompting a lawsuit by the DVD Copy Control Association (a judge sided with Kaleidescape) and repeated efforts by the studios to change the licensing rules for DVDs to push Kaleidescape out of compliance. If MusicGiants can persuade more studios that loading home servers with authorized copies of movies is a good thing, perhaps there's hope yet for Kaleidescape.

-- Jon Healey

VideoGiants logo courtesy of the MusicGiants website.

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Times editorial writer Jon Healey pens opinion pieces about a variety of business issues, and blogs about technologies that are changing the entertainment industry's business model.

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