But rentals of new releases can be profitable, Cryan said. That’s because a single movie can be rented many times. Also, the price per rental of a new movie is often higher than for an older one. A high-definition version of this year’s “The Great Gatsby,” for example, rents for $4.99 on iTunes, whereas an HD version of 1999’s “Ghostbusters 2” rents for $3.99.
Older catalog material is usually licensed from studios in bulk, often with a revenue-share deal between the merchant and studio based on how much it is viewed, as is the case with Netflix.
Such catalog material is the specialty of Netflix, which gives its customers access to content for a fixed price.
Rose at Technicolor said he does not at all see his service as a competitor to Netflix because M-Go is choosing instead to provide content that is not available on Netflix. In fact, M-Go refers users to other outlets including Netflix if a title is not available on the service.
Batter said his deals with studios are structured on a wholesale model, with payments going back to content owners. He would not say if there are upfront payments as well.
Batter and Rose believe there is significant opportunity to gain share by offering novel features to users.
For example, M-Go is compatible with Ultraviolet, which allows viewing of certain studio movies on any online device.
Some of the new features have been under development at a Technicolor research and development site in Silicon Valley as well as at M-Go’s Culver City office; they are scheduled to start rolling out this week.
One will be an update to the recommendation engine to help users find movies and TV shows that suit their tastes, possibly based on their mood.
“We’re convinced there’s a market,” Rose said.