U.K. company distributes DVD by newspaper

Disc includes one free movie plus one unlockable with fee

By Jennifer Netherby -- Video Business, 9/5/2008

SEPT. 5 | A British company wants to deliver movies to newspaper readers in the U.S. and the U.K., similarly to how Prince gave away his recent CD through London paper The Mail On Sunday.

DVDPay is in talks with major studios to give away and sell movies on DVDs inserted into newspapers. The DVDs would include one free movie and a second movie that users would have to pay to unlock and watch.

The company is in talks with The Mail On Sunday to deliver DVDs to the paper’s 3 million-plus Sunday readers, DVDPay sales manager David Morris said.

The company is in talks with studios, including Warner Bros. and 20th Century Fox, which are testing the encryption on the discs to ensure the movie lock can’t be broken until a consumer pays for it.

DVDPay uses proprietary technology to lock movies on the discs. Users that want to watch the movie call a listed phone number and pay anywhere from 3.5 pounds to 9 pounds for a personal identification number, which they type in using their DVD remote. The movie is then unlocked and can be played just like a standard DVD.

Under the business model, the newspaper pays the studio for the free movie, then gets a cut of revenue from sales of the locked movie.

Morris said DVDPay views the locked movie as an impulse purchase and wants to offer recent—but not brand new—releases, which consumers wouldn’t necessarily run out and buy but might purchase for the right price.

“We’re discussing back catalog films and films that may be still on shelves but are not new release,” he said.

DVDPay has already sold adult movies through give-away discs in adult magazines in the U.K. and tried the strategy with Hustler in the U.S., though Morris said the company determined the model wouldn’t work in the U.S. for adult product because there’s so much free adult content available online.