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CES: PortoMedia's video kiosks

Portomedia_movie_key_2gb Heard this one before? A tech start-up company plans to install movie-rental kiosks in airports, train stations and convenience stores. This go-around, the would-be entertainment retailer is PortoMedia of Galway, Ireland, whose business plan revolves around tiny, souped-up flash drives. The company is backed by IBM, which is supplying the kiosk technology, and claims to be in late-stage talks with the major Hollywood studios. The kiosk idea has been floated (and sunk) many times, most recently as a way to burn DVDs on demand at video stores and other retailers. What makes PortoMedia a bit different -- in a way that bodes well for its business -- is shorter wait times for customers and lower equipment costs.

PortoMedia's secret weapon is its 2 GB flash drives, which can transfer data 10 times as fast as a standard USB drive. That means a PortoMedia Movie Key can download a full-length movie from a kiosk in a minute or two -- barely long enough for the kiosk to play a trailer. The movies are in DVD quality, which is about the only thing the first-generation drives can store (and even then, only one or two at a time). Cathal Deavy, marketing director for PortoMedia, said the next generation Movie Keys will have at least four times the capacity and three times the speed, enabling them to download high-definition films as quickly as today's drives can. The kiosks, meanwhile, will be able to store 500 to 1,000 titles, which is about the same as a video store carries. But PortoMedia won't charge late fees: the movies will be wrapped in electronic locks that render them unplayable 24 to 48 hours after they're first viewed. Deavy said new releases would rent for about $4. The service also will sell movies that can be transferred from a Key onto a computer hard drive or other storage device.

The electronic locks (Windows Media DRM, to be precise) will also restrict the number of PCs, portable devices and set-top boxes where the Key's contents can play, in keeping with whatever limits the studios set. But PortoMedia is already working to enable more devices to act as Movie Keys, increasing the options for storage and playback. In one interesting tie-up, the company plans to integrate with Seagate's DAVE drives, which can connect to computers, home networks and cell phones via WiFi and Bluetooth. Those pocket-sized devices, which will hit the market later this year with 60 GB hard drives inside, are designed to act as media servers, streaming audio and video to home and car entertainment systems.

Among other challenges, PortoMedia will have to find distribution partners (e.g., a convenience store chain and local airport authorities), and it will have to keep its equipment costs, studio royalties and location fees low enough to allow for a profit margin. It also faces the same dilemma that online movie distributors do: few TV sets are equipped to play PortoMedia's digital film files. Nor will users be able to burn copies of the films they buy or rent onto discs that can play in a conventional DVD player. Instead, the company it plans to sell a $50 set-top box that its MovieKeys can plug into. Not that the public is clamoring for another box to stuff in the home-entertainment center....

-- Jon Healey

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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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