Digital Store Gears for Opening

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Moving a step beyond its existing software-on-demand streaming platform, Media Station Inc. is preparing to launch a secure digital-download service that will enable users to buy CD-ROM titles over a broadband connection.

Media Station's "Digital Store" service is set for a national commercial launch on Sept. 1, said company CEO Jim Maslyn. At that time, it will become available to the company's domestic distribution partners, such as Comcast Corp., Time Warner Cable, AT&T Broadband and Sprint Corp., among others.

On the international front, Media Station has licensed its SoD streaming technology to NextGenTel and B2 Bredband in Scandinavia and has launched trials with NTT Communications and Toppan Printing's "Bitway" service in Japan.

Broadwing, the product of the merger of Cincinnati Bell and IXC Communications, is currently test marketing Digital Store today on digital subscriber lines, Maslyn said.

Digital Store will enable Media Station customers to purchase and retrieve CD-ROM titles in digital format without paying a shipping fee, Maslyn said. In turn, software publishers and retailers are expected to save in distribution, inventory and packaging costs and reduce their time to market considerably.

Maslyn said Media Station is working with "a variety of publishers," but said he would not name specific companies until the September launch approaches.

To protect publishers from pirates, Digital Store downloads retain the same copy-protection scheme that's embedded in boxed, off-the shelf titles. Concern about protecting digital content came to the forefront after the rise of digital file-swapping applications like Napster Inc., Maslyn said.

"We don't modify the CD to deliver it. We don't mess with the source codes," he said, noting that one publisher told him it would have to pay in the neighborhood of $100,000 to encode six to eight titles.

Downloading will also benefit consumers' pocketbooks, Maslyn predicted. Because a digitally delivered title doesn't come with the box and a hard-copy manual, Digital Store will likely undercut the brick-and-mortar retailers, he said.

Instead, Media Station's Digital Store will post the salient points of a title's hard-copy manual online.

Maslyn wouldn't say how Digital Store would split its revenues with publishers and service providers, but said that publishers would probably get the largest cut.

The business model also depends on which entity obtains the content. In Europe, for example, operators are more interested in licensing Media Station's technology and obtaining the content on their own, so those companies stand to get a larger share of the revenues, Maslyn said.

"There's no vanilla deal," he said.

Media Station's Digital Store technology is tightly tethered to a patent the company filed for its "Smart Driver" technology, which supports both real-time streaming and digital software delivery. That patent is still pending and may not be obtained for another 12 to 18 months, Maslyn said.

Of course, Internet software-title downloads are nothing new; there are literally thousands of sites that offer them. However, most of the titles available for download today are in the range of 25 to 30 megabytes — a small number, considering that a full-fledged CD-ROM game can run more than 500 megabytes, Maslyn said.

Digital River Inc. and Gigex also manage the digital delivery of large files for publishers. Gigex already has a patent for its delivery technology.

Into Networks Inc., a Media Station rival whose bread and butter is in the streaming of software titles on a rental basis, also offers a download option to its partners.

"We have some customers who are interested in doing both," said Into vice president of marketing Bill Holding.

Into's downloading service doesn't send the actual installer file, a method that ensures the security of the CD-ROM title and manages files so that they don't alter registries and other elements that could affect how a PC runs, he said. Instead, the IntoPlayer — which is housed on the PC — launches the encoded title and "locks" it to the machine, thwarting potential pirates.

"There's a niche requirement for [digital downloading]," Holding said, "but our focus is really on streaming. That's partly because we think that's the way the market is going to go. We just think there's more interest in streaming and time-based software."

Into got a taste of that on June 25 when it offered an early rental release of Alone In the Dark: The New Nightmare
through its partnership with software retailer EBWorld.com Inc. and publisher Infogrames Inc.

For $4.99, consumers were given permission to download the game and rent it for 48 hours before the title was released at retail. The fee could have also been used toward the purchase of the boxed game, if it was bought online at ebgames.com.

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