Canada’s first online movie streaming service unveiled

It’s billed at Canada’s first “legit” online film and TV shows streaming service, and the firm offering it – Ottawa-based Zip.ca – is relying on certain factors to make it a resounding success.

These include a “recommendation algorithm”, a large customer base and a huge selection of titles. (The recommendation algorithm helps customers to decide which movie to watch. Based on the person’s profile and a list of previously rented titles, the system provides a list of other movies that might appeal to the customer’s tastes).

Through its alliance with Sonic Solutions – a Novato, Calif.-based digital media content publishing outfit – Zip.ca hopes to offer Canadian patrons the kinds of services Netflix provides in the U.S.

“Pushing movies through the Internet is a natural evolution of the home entertainment market,” said Curt Millar, chief operations officer at Zip.ca. “From on air broadcast, the future is getting video data into your living room.”

He said by fall of this year consumers would be able to download to their PCs, movie and TV episodes offered by Zip.ca’s streaming service.

The Ottawa-based DVD movie rental firm already provides Canadians with more than 72,000 DVD titles, which they can order online and have delivered to their homes via regular mail.

“Now instead of having to wait for one to four days, viewers can start enjoying shows and movies quickly on their PCs, or hopefully pretty soon, on any Internet-enabled device,” said Millar.

Many Canadians already download movies and other video content to their computers.

But a lot of these are obtained via peer-to-peer file sharing sites that circumvent digital rights management tools set up by content producers.

A recent study by comScore’s Media Metrix revealed that 88 per cent of Canadians with access to the Internet watched an online video during the month of January.

According to Media Metrix, Canadians watched 3.1 billion videos online in January alone – half of them on popular video-sharing Google site, YouTube.

Millar said movies made available through Zip.ca’s streaming service will be licensed from the producers just as their rental movie DVDs currently are.

As Zip.ca does not have a file compression and video streaming infrastructure, he said, his firm is partnering with Sonic to deliver that.

Zip.ca will be using Sonic’s Roxio CinemaNow service to offer content, according to Mark Ely, executive vice-president, Sonic Solutions. CinemaNow is a movie streaming service that’s been operating in the U.S. since 1999.

Apart from delivering movies faster to customers, the streaming service is expected to have several advantages over Zip.ca’s current hybrid (online and bricks-an-mortar) set-up, according to Millar.

For one thing, Zip.ca will be able to cut real estate costs as online movies will require drastically less storage space. The company will also be able to reduce postage expenses as delivery will no longer rely on the postal service.

But at least one Canadian technology consultant sees some basic hurdles along the way.

While obtaining movies almost instantly on your PC is very appealing, this kind of service depends on the capability of the target markets’ systems, noted Michelle Warren, president of Toronto-based MW Research and Consulting.   

“Zip.ca appears to have solved the backend tech infrastructure challenges by partnering with Sonic Solutions,” she said.

It remains to be seen if there are a sufficient number of consumers emotionally and technologically prepared for this model.  

Warren said even now, while many Canadians download movies online, this is usually done for free via file sharing sites.

For most computer users such downloads can take anything from a few hours to a couple of days, she noted. “Will consumers be willing to pay a fee for something they can get for free?”

The other obstacle to rapid adoption of this model has to do with Internet speeds, Warren said.

She noted that while high-speed Internet service is available in major cities, many Canadians in outlying areas still have dial-up connections or no Internet access at all.

“I can see this type of service being really useful in cottage-country, but ironically today those areas aren’t well-served by ISPs.”

These challenges simply mean Zip.ca would need to offer its services via multiple channels, Warren said.  It should hold on to its DVD business while providing video streaming as an alternative.

“I think the company is aware of its challenges and is prepared to build its market through the long haul,” she said.

Moving forward Warren also foresees other streaming services – such as Apple iTunes and local Internet service providers (ISPs) – potentially offering services that compete with Zip.ca. 

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