A Start-Up Fueled by Star Power

Freeman demurred: "I'm sort of a go-a longer."

The business was built on the strengths of the two: McCreary's technology background and Freeman's Hollywood connections.

After talking to his many actor, director and studio-head friends, Freeman knew creative types were terrified by Internet film piracy. "[Steven] Spielberg had expressed incredible fear of [Internet downloads] because his movies are stolen all the time," Freeman said.

Freeman and McCreary made a short film to explain ClickStar, emphasizing the piracy protections built in. He then invited Hollywood hotshots to ClickStar's Santa Monica headquarters, a top-floor loft space in a modern building a block from the Pacific Ocean.

"We've had just about everybody down here," Freeman said, ticking off names -- actors such as Tom Hanks, Clint Eastwood, Danny DeVito and Pierce Brosnan, and studio chiefs such as News Corp. President Peter Chernin. Inside the loft, Freeman and McCreary built a living room with a big-screen TV and a couple of furnished bedrooms with computers. The idea was to get the Hollywood types into a comfortable, familiar setting so they could see how the product worked. It worked well enough to woo a couple of studios into joining ClickStar's launch.

Freeman and McCreary also recognize that consumers have to find ClickStar easy to use. Windows Media Center computers that use the Viiv (rhymes with "five") technology by Intel -- which is a principal investor in ClickStar -- will automatically display the service for downloads and playback on PC or TV. Also, DirecTV's new high-definition set-top boxes will come ClickStar-ready. Others will be able to access the service on the Web at http://www.cstar.com/ and watch the movies on a PC.

ClickStar's chief executive, James Ackerman, said users should initially expect a library of 600 to 1,000 movies from two or three major studios (that he would not name) and some indie studios. The company will also offer a documentary channel hosted by DeVito and a classic-movie channel hosted by Peter Bogdanovich, both of which launch Friday.

The first new feature-length film available for purchase on ClickStar will be "10 Items or Less," a film Freeman produced and stars in, set to be released simultaneously in theaters and on ClickStar on Dec. 15.

But is this enough for consumers to grasp downloads as a way to get movies?

The Diffusion Group, a Texas research outfit that conducted two recent studies on the viability of the movie-download business, found that nearly one-quarter of households with high-speed Internet would be willing to pay $10 to download a movie to watch on a home PC or video iPod. The percentage drops sharply as the price goes up. At $20 per movie -- about the price of a new movie on DVD -- only 12 percent said they'd pay.

The study asked the same users: If you could download a movie from the Internet for $10 but had to pay extra for a set-top box that would let you watch it on your television, would you still do it? If the box costs $200 to $300, 23 percent of all respondents said yes, the study found.

Alarmingly for businesses like ClickStar, however, when the hypothetical price of a movie rises from $10 to $20 to $25 and the set-top unit costs extra, the percentage of consumers willing to pay extra to watch it on TV falls off the table, statistically speaking.

Kevin M. Corbett, vice president of Intel's digital home group, said he thinks ClickStar and iTunes can find a sweet spot for pricing that will create a viable business. He was relieved, not upset, when Apple beat ClickStar to the movie-download business using a variation of ClickStar's model.

"I'd hate to be in conflict with someone as big and influential in media as Apple when we're trying to build a market," he said.