You Oughta Be in Pictures

Friday, Mar. 29, 2002
Here's a storyline Hollywood is bound to love. Young movie fan quits his financial markets job to launch a film website that should attract users and advertisers galore. Site indeed proves popular with the punters, but advertisers stay away in droves as dotcom meltdown begins killing off consumer-oriented websites. Our hero quickly figures out a new business model, changes course and saves the day.

That's the bare bones story behind In-Movies ( www.in-movies.com), a London website launched in late 1999 by Lawrence Penn, a former commodities market trader and life-long movie buff. "My passion has always been films," says the 40-year-old Penn. But during the e-commerce boom of the late '90s, he saw a way to combine business with pleasure. In-Movies began as a short-film website. The notion was to attract legions of other film fans, earn revenues on advertising and subscriptions, and eventually offer feature films on-demand when broadband Internet connections became more commonplace. But not only did ad revenues disappoint, it soon became apparent that it would be several more years before broadband gained widespread, household penetration across the U.K.

So last summer, Penn overhauled his site. In-Movies still offers scores of short films on streaming video, ranging in length from 1 to about 15 minutes. It also now includes trailers of mainstream releases, interview clips with stars and news about the industry. However, all that free content is a loss-leader. Because In-Movies's main business since last summer is online rental of DVDs. Customers make a list of 100 films they want to see in order of preference (the list can be constantly updated). They're then sent two, three or five films at a time, depending on their monthly membership fee. Every time they return a film, they're sent the next one on their list. Penn says the short-film website brings in 300 to 400 new subscribers each month, and he expects to have 5,000 subscribers by September and should be cash-positive by year-end.

In-Movies will soon start selling DVDs, as well, and Penn also plans to open some small retail outlets in busy locales around London. It's also creating a video-on-demand service for Kingston Communications, a small telecom based in the north England town of Hull. That service will offer 125 classic, foreign and independent film titles. And although there are only about 300,000 broadband users in the U.K. right now, Penn wants to launch his online video service later this year. Again the focus will be small: about 200 classic titles. "It's probably worthwhile getting in relatively early," Penn says. "Once people have got broadband, they'll know where to come." Moreover, the online video service can be expanded into other parts of Europe while still based in England.

Since many short films are made by young, struggling filmmakers, Penn helps fund some of their projects. One short film that In-Movies helped finance, Between the Wars, is now earning good notices on the film festival circuit. Perhaps Penn should get a budding Spielberg to do the In-Movies story. Everyone knows that Tinseltown is a sucker for happy endings.