More Movies than iTunes

Focusing on independent and international films, the movie-download startup offers four times as many films as Apple's online store

In the world of online movie distribution, Gaurav Dhillon, chief executive of startup, has an edge over a formidable leader, Apple's (AAPL) iTunes Store. Jaman has 1,000 films available for download, four times as many as iTunes.

It's hard to say how long he'll keep that lead. But it's one Dhillon was all too happy to tout at DEMO 2007, where Jaman debuted the service, one of many focusing on online video at the annual conference (see, 1/31/07, "The New Media Mogul—You").

Niche Market

Dhillon and his company are hoping to capitalize on another distinction. In a business driven mostly by widely released, advertising-fueled blockbusters, Jaman is targeting the huge batch of independent and foreign films, many of which will never be coming to a theater near you.

The service, still in a test phase, will offer movies from around the world and small, independent filmmakers in the U.S. Renting a film will cost $1.99 and buying it will cost $4.99. Jaman uses downloadable player software that runs on either Macintosh computers from Apple or PCs running Microsoft's (MSFT) Windows. Customers can watch downloaded movies either on the computer or on a home entertainment system.

Jaman is a second act for Dhillon, who was founder and CEO of Informatica (INFA), a Redwood City (Calif.) software company that launched in 1992. After stepping down in 2004, he took a few years off to look for something new to do. "I had wanted to do something with photography, which is my hobby, but I realized I wasn't going to change the world with that," he says.

During that time, he traveled around the world and learned a surprising fact: Some 99% of the movies made globally will never be shown or distributed in the U.S., the biggest movie-watching market. So he teamed with Carlos Montalvo, a former vice-president at Apple, who was also general manager of the Quicktime group, Apple's video and streaming media software division. He's raised $4 million from his own Dhillon Capital and additional financing from unnamed "technical luminaries" in technology and entertainment. The company has negotiated the rights for movies from studios including Arc Light Films, a Taiwanese studio, and Celestial Pictures, with headquarters in Hong Kong, and is now looking for a second round of funding.

Heavy Competition

Consumers are starting to warm to the idea of paying to download TV shows and movies from the Internet. Downloads of TV content surged 255% in August from the previous year, according to researcher NPD. Apple leads the market in terms of overall downloads, followed by MovieFlix and CinemaNow.

Yet Jaman is launching amid a flurry of activity, and overall demand from consumers is still tepid. Apple in January said it signed a deal with Paramount Pictures, a unit of Viacom (VIA), to bolster the motion picture offerings on the iTunes Store; the consumer electronics maker is adding more TV shows to its download offerings every day. CinemaNow has begun offering downloadable movies that can be burned to DVDs for $9.99, and online rental giant Netflix (NFLX) entered the film-download fray in January (see, 9/12/06, "Don't Nix Netflix Just Yet," and 9/26/06, "CinemaNow's Internet Cliff-Hanger").

Hollywood is treading gingerly around movie downloads, too. Retail giant Wal-Mart (WMT), which sells about 40% of the $17 billion in DVDs sold last year, isn't thrilled when studios cut download deals that threaten its hold on the business. The retailer is said to be asking for concessions from the studios in the form of lower wholesale prices on DVDs, and its dismay may be causing some studios to drag their heels on Web-distribution arrangements (see, 8/31/06, "Wal-Mart and Apple Battle for Turf").

The Old Country

Since Jaman is playing largely outside the major studios, the battle between Bentonville and Hollywood is thus far largely irrelevant to him. But that may not always be so. Dhillon says his plans for the coming year include adding titles from the independent film divisions of the major studios, including Fox Searchlight. He's also interested in adding TV shows from Spanish-speaking countries like Mexico. "There are 56 million people who live in the U.S. but who weren't born here or who speak another language and who would like to see movies and TV shows from their native countries," he says.

While in big cities there are often local retailers who import movies from around the world, that's not always an option elsewhere, says Dhillon, a brain surgeon originally from India now living in Topeka, Kan. His target customer: "He's got a job he loves and likes where he lives, but he can't get movies from India at the corner video store," he says. "This is for someone like him."

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