MOD Seeking CE Pacts For SD Card Video Download Service

Having deployed its SD-based video download service with InMotion, MOD Systems will expand its reach into CE with an array of external card readers targeting set-top boxes, Blu-ray players and portable devices, CEO Anthony Bay told us.

MOD’s video download kiosks, with access to more than 3,500 movies, have launched at 27 InMotion locations in 12 airports, including in Atlanta, Denver, Los Angeles, New York and San Francisco, Bay said. The kiosks are linked to MOD’s servers via DSL or T1 high-speed lines and charge $3.99 for a 48-hour rental that’s good for 30 days. New releases are sold for $19.99, and back-catalog titles are $12.99, he said.

The movies can be downloaded in 2 to 2-1/2 minutes and are merchandised alongside GreenPlay USB-to-SD card readers ($9.99), 4 GB SD cards ($29) and 8 GB SD cards packaged with a reader ($39), Bay said. MOD has content agreements with Lionsgate, MGM, Paramount and Warner Brothers and a range of independent studios.

As MOD pushes into retail, it’s “making good progress” in forging alliances with CE manufactures, Bay said. It has previously announced partnerships with D-Link and Asustek, neither of which has fielded MOD-based product. Kingston Digital and Transcend also make GreenPlay USB-to-Card readers. MOD is seeking pacts for netbook, tablet and notebook PCs as well as smartphones, Bay said.

"The focus is going to more on things that plug into the TV set rather than the TV itself,” Bay said. “There is so much more velocity in set-top boxes and Blu-ray players. The majority of those things already have SD slots and have the right microprocessors so that it’s almost a zero cost to add the technology, but it takes time."

While MOD is moving forward with InMotion and seeking other distribution channels, it ended “technical tests” at Blockbuster and Movie Gallery’s Hollywood Video. Hollywood Video has closed its stores, while Blockbuster recently filed for bankruptcy. MOD investor NCR supplies kiosks for Blockbuster Express and the MOD’s trial with Blockbuster in the Dallas market ended in June. “It made a lot of sense to offer somebody who is going to be in a video rental store to get a film the opportunity to get a movie in a different way,” Bay said. “It worked pretty well from a test point of view, but that’s what it was -- a test."

MOD also expects to introduce an SD Card-based music download service late this year with a New Jersey retailer that Bay declined to identify. MOD’s service has access to 5 million tracks from a range of music labels and expects there may be some stores that deploy video and music download services, he said. MOD secured licensing agreements for music titles in connection with an earlier CD-burning service it developed and at one point planned to test with Circuit City (CED Jan 12/07 p1). InMotion is interested in installing the music service, Bay said.

While MOD’s service was once viewed as a possible upgrade to NCR’s DVD kiosks, it now uses a separate machine and location, Bay said. MOD tested placing display screens for the download service alongside the kiosk, but with mixed results, Bay said.

"If you look at the DVD business, it’s all about throughput and minimizing line times,” Bay said. “So if somebody is browsing for digital, it doesn’t matter if they are standing in front of one of two kiosks; they are the only person standing in front of the DVD machine.” While MOD is testing whether to install music and video download kiosks in the same location or separately, “I don’t think anybody understands what the right mix for that is for that yet."

To pay for expansion, MOD recently completed a $6 million funding round led by NCR. MOD hasn’t said how long the money is designed to carry the company, but it “will continue to raise capital until we reach cash-flow breakeven,” said Bay, who wouldn’t say when the goal might be reached. MOD raised $35 million in 2008 largely from NCR and Toshiba, the latter having developed a reference design with MOD. MOD has licensed content protection technology from Toshiba, a founding member of the 4C Entity, which administers the IP.