Embracing the Possibilities of Online Movies

Where Hollywood saw the risk of cannibalizing DVD sales, one man saw marketing and tie-in opportunities galore

Hollywood studios face a conundrum: How to put movies online without hurting ticket and DVD sales? The answer in most cases is to wait months between releases. Thomas Lesinski is helping to blow up that model.

Lesinksi, 49, worked on the Pepsi (PEP) and Gillette (PG) advertising accounts for BBDO in New York before heading to Hollywood to market DVDs for Warner Bros. (TWX) and then Paramount (VIA). He was named Paramount's first digital czar in 2006. Determined to bring the studio into the 21st Century, Lesinski looked outside Hollywood for talent, hiring techies from AT&T (T), game maker Electronic Arts (ERTS), and the online music service RealNetworks. "The key thing about any new technology is whether it creates a bigger market than it cannibalizes," says Lesinski. "And we think it is largely additive."

Lesinski builds unconventional partnerships—with computer makers, for example. Dell (DELL), to launch its movie download service in September, paid for the right to stream Paramount's Iron Man; it also pre-loaded the comic book movie on its new PCs the same day it appeared as a DVD. Lesinski has cut deals with mobile phone makers, as well. Paramount licensed Mission: Impossible III and Transformers to Nokia (NOK), which included the movies as a bonus on some of its phones in Japan. And Lesinski has cut a deal with Facebook, where visitors can watch clips of Paramount movies—followed by a plug to buy the DVD.

Meantime, he has been building a digital studio within a studio. Its first release, Jackass 2.5, first appeared last year on Blockbuster's (BBI) site. The premiere attracted 15 million viewers and built buzz for the DVD, which was released later and sold a million copies. Lesinski's producers are now working on four movies that should premiere online this year. Lesinski's team also is churning out titles based on such flicks as the upcoming Star Trek that can be played on iPhones and other mobile devices.

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