The following is in The Australian IT section & shows the way in...

The following is in The Australian IT section & shows the way in which MSO can benefit from the new Secure e Solutions business it has purchased. It means that along with a royalty from each box sold, a royalty from each ESR it now gets a fee from every payment made.

"VIDEO Ezy is planning to release an electronic movie rental box in time for Christmas in an attempt to hold off online competition.

Movie rental stores are increasingly feeling the pinch as the internet provides new ways of viewing movies, and has given rise to competitors such as Reeltime Media and Quickflix that use new video rental models.

Video Ezy has ordered 10,000 home media centres from data communications producer Mobilesoft, at a cost of $4.5 million. The centres will underpin its electronic rental service. Customers will use the centres to play movies they have downloaded on portable storage devices in a store.

"At some point this is the whole future of the business," chief information officer Steve Hogben said.

"We know Video Ezy is a very large business today, but if it didn't develop a new set of products it would not disappear overnight, but there would come a point in a number of years where you could see that it would need something like this to stay competitive."

About 100 e-boxes have been deployed since the end of last year as part of a trial, and while an official date hasn't been decided for a national rollout, Mr Hogben said: "We're looking at the Christmas time frame, perhaps be just before or just after."

Portable storage devices will be used to download files from in Video Ezy stores, and they can be watched on the media centres.

The movies, about 1.5GB in size, take about 80 seconds to download, and customers pay for the amount of times they watch a movie. They self-erase after 30 days.

The e-boxes range in price from about $200 for a basic system to $800 for one with features such as a DVD player, large capacity and high-definition tuners.

Video Ezy is expecting most demand for mid-range systems. The company is planning to move about 350,000 units over the next two years, as it targets its most active users.

Mr Hogben said users could acquire an e-box using mobile payment plans, and there would be "no real outlay at all" for heavy renters who took between six and eight DVDs a month.

The e-box has already been tweaked to allow customers to make purchases, which are about 30per cent of Video Ezy's business.

On Friday, Mobilesoft announced its acquisition of the electronic payment software company Secure e-solutions for $3.13 million, in a move aimed at driving the payment side of the box.

Aside from the technology itself, one of the big outcomes of the trial is seeing how customers adapt to a new way of hiring and watching movies.

"With a proposition like this, a lot relates to human psychology, such as whether people are happy to stand in front of a kiosk and whether you want to have the kiosks in the store."

Preserving today's viewing experience was the reason Video Ezy decided against using broadband to deliver movies.

"The experience the user gets today is taking a piece of content home, turning it on and watching it. If you're asking them to download something for hours, that's really not the same thing."

Mr Hogben said broadband capable of supporting video on demand was between two and five years away, but the e-box was future-proofed so it could use broadband once it became available.

"We don't have to bet the business on trying to work out when customers would prefer to use video on demand.

"When it's available we can do that. The e-box is also capable of operating as a set-top box.

"It's a matter of having a product in the market, ready to go when the main demand gets here."