Disney, Fox, others said to join forces for download service

[LOS ANGELES] Several major Hollywood movie studios have signed up to a new digital film service led by Walt Disney that lets consumers buy movies and store them in a digital locker to access on their devices, people familiar with the matter said.

Disney has been courting studios to join its Movies Anywhere service since last year, Bloomberg News reported at the time. Customers can watch and keep their online film purchases at a single site through the product.

20th Century Fox, Warner Bros. and Universal Pictures are among the major studios joining the service, the people said. The plan could be announced as soon as this week, they said.

The service could help studios compensate for the collapse in physical DVD sales and a disappointing year at the box office.

By banding together, the makers of the world's most popular films, including Disney's Star Wars and Warner Bros' DC Comics, are betting they can succeed in attracting more users than their previous attempts did. Disney originally introduced its service under the name Disney Movies Anywhere in 2014, and other studios supported a rival format called UltraViolet.

Shares of Disney, based in Burbank, California, were little changed at US$99.59 at the close, erasing losses earlier in the day. 21st Century Fox, the Fox studio's parent company, rose 0.5 per cent to US$26.72.

DVD sales fell more than 10 per cent in the first half of this year from a year earlier, while electronic sales have grown more than 8 per cent, according to data from the Digital Entertainment Group. North American theatre ticket sales year to date are down almost 5 per cent, according to ComScore Inc. Theatre stocks fell on Monday after another movie, Blade Runner 2049, disappointed at the box office last weekend.

Viacom's Paramount Pictures is the only one of the six major studios that isn't joining Movies Anywhere, because of a disagreement over financial terms, said one of the people, who asked not to be identified because the talks are private. Paramount, maker of the Transformers films, and smaller Lions Gate Entertainment Corp, home of The Hunger Games, are supportive of the concept and may join later, two people said.

Disney Movies Anywhere used a proprietary storage technology called KeyChest that allows consumers to access movies on one site, whether they're purchased online from Apple Inc's iTunes, Amazon.com, Google or a brick-and-mortar store like Wal-Mart Stores.

The service offered films from all of the company's brands, including Disney, Pixar, Marvel and Lucasfilm.

With the rise of Netflix and other video services, studios may be too late to persuade consumers to buy movies to keep and re-watch, said Rich Greenfield, analyst at BTIG said, who has a buy rating on Netflix and a sell rating on Disney.

"The consumer has moved on from ownership of media to access via subscription services," he said.

BLOOMBERG