paidContent.org - UPDATED: Online Movie Service Cinemanow Acquired By Sonic Solutions, For Mere $3 Million

paidContent.org - UPDATED: Online Movie Service Cinemanow Acquired By Sonic Solutions, For Mere $3 Million

Rafat Ali
paidContent.org
Wednesday, November 19, 2008 11:07 PM

Updated: The sale price was even more of a fire sale: a mere $3 million, it turns out, and it also assumes some liabilities. Wow, that would have surely hurt its investors, listed below. Lionsgate had an 18.6 percent stake in the company. According to Sonic, CinemaNow has been generating around $1 million-$1.2 million per quarter in revenue on expenses of $1 million-$1.5 million, reports Variety.

Original post: Cinemanow, the online movie service that has been around for a long time, has been bought by Sonic Solutions, the digital media software company. Terms of the deal were not disclosed, but rival Movielink got sold for a fire-sale price of $7 million last year to Blockbuster, and while Cinemanow's price is probably not that low, it isn't likely to be exponentially higher as well...see update above.

Cinemanow, founded in 1999, was backed by Lionsgate, but never really took off, and had been languishing from slow growth, as other online TV-focused (and more open) rivals like YouTube, Hulu and others took off. It was one of the first ones to offer DVD burning with some movies, and also offered limited "day and date" download and DVD burning; it was also one of the first ones to be embedded with devices such as Dell, HP, Samsung, TiVo, DivX, and Archos, but adoption was minimal.

The company CEO Curt Marvis left earlier this year to join Lionsgate as its new president of digital media. In 2006, it received $20.3 million in late stage (fifth round) funding, from Echostar and Japanese mobile content giant Index Holdings (JSD: 4835). Previous investors included Transcosmos, Cisco Systems, Lionsgate and Menlo Venture. Total money invested was more than $40 million.

As for Sonic, the two companies had been working together for a while to enable the download and burn of DVD movies on to its new Qflix DVD drives. The Qflix system adds a digital lock to burned DVDs, and thus studio-sanctioned, so to speak, and it had been working with partners like Dell and Pioneer for distribution. CinemaNow will be merged into Sonic's Qflix team to form a new Premium Content Group under the direction of Mark Ely, Sonic's EVP of Strategy. With this deal, CinemaNow CEO Tom Frank is leaving, while its COO and president David Cook become the GM of this new group. The group will focus on increasing the placement of CinemaNow's storefront on PCs and consumer electronics devices, and expanding the adoption of the Qflix technology platform. Sonic also owns Roxio, for those interested, which at one point owned Napster. Details in release.