Film Studios Taken to Court for Collusion

Just as the FCC ruling to loosen media ownership rules has caught the public’s attention, the studios are being sued for price fixing by Intertainer:

The one thing about the Intertainer service on which everyone can agree is that it was ahead of its time.

Founded in 1996 to deliver movies on demand to cable television subscribers, it soon evolved into a system to deliver movies on demand to customers’ PCs over a dedicated Internet connection. In both incarnations, the service seemed to stretch the information infrastructure to the limits of its capabilities, and possibly a little beyond.

….But there was never any doubt that Intertainer Inc. was onto something revolutionary: video you could order for viewing at any time, with the ability to fast-forward, reverse, pause and stop the program at will. By September 2002, the company claimed 125,000 Internet subscribers and an additional 35,000 who received a TV-based service via Comcast Corp.’s cable system.

At that moment, just as the technical issues seemed to be on the verge of getting resolved and broadband penetration into the home seemed about to take off, Intertainer shut down. The reason, according to its co-founder, Jonathan Taplin, had nothing to do with technology or customer acceptance. Instead, he says, it was torpedoed by the movie studios.

Their concern, he contends in a lawsuit currently in the discovery phase in federal court in Los Angeles, was that Intertainer stood to become a serious competitor to a service, now called Movielink, that was about to be launched by five major studios. (Movielink’s owners include Sony Corp.’s Sony Pictures Entertainment, Vivendi Universal’s Universal Studios and AOL Time Warner Inc.’s Warner Bros., which had contracts with Intertainer and are named in the Intertainer lawsuit. The other owners are Metro-Goldwyn-Mayer Inc. and Viacom Inc.’s Paramount Pictures, which aren’t named in the litigation because they never reached distribution deals with Intertainer.)

Because the studios saw Movielink as a vehicle to exercise control over the price and terms for digital distribution of their films, Taplin maintains, they wanted to make sure it had a clear field. [LA Times]

So they torpedoed him: jacked up prices, withdrew supply, and drove him out of business clearing the way for Movielink. If Taplin wins, he wants to back into business – he’s a glutton for punishment.