Sonic Solutions said Monday it signed its first DVD-on-demand deal with online film provider Movielink, bringing consumers closer to being able to burn movie downloads legally, but one big step remains.

said Monday it signed its first DVD-on-demand deal with online film provider Movielink, bringing consumers closer to being able to burn movie downloads legally, but one big step remains.

The idea is to let consumers who have downloaded movies through Movielink be able to burn them to DVD for use with other computers and media devices. However, Movielink still needs to sign up Hollywood, so burnable downloads may not be available until late this year or early next.

“Today if you want a DVD, you have to buy a physical DVD from Amazon or Best Buy,” Mark Ely, Sonic’s executive vice president of corporate strategy, said in a recent interview. “If you want it on demand, you can rent it over a set-top box or use a PC to order the title. But you can’t burn it, you can’t take it on the road.”

Best Buy

Business and Tech Challenges

Novato, California-based Sonic hopes to cut deals for enterprise printing on demand, retail kiosks, as well as home video services. Movielink is its first such customer.

Sonic, maker of the popular Roxio DVD burning software, has spent the last three years solving the technical problems of writing digital rights management (DRM) onto DVDs and lobbying studios to change legal licenses to include DVD burning.

Roxio

Santa Monica, California-based Movielink, of all online video companies, may be the most likely to get Hollywood onboard with DVD burning. It is a joint venture of five major studios, and the studio representatives on the company’s board of directors have signed off on the deal, according to Elana Altshuler, a public relations representative for Movielink.

Direct competitor CinemaNow, which is also rooted in the studios, is another likely customer for Sonic.

Movielink and CinemaNow in April announced they had won deals to sell major Hollywood releases for download on the same day as they come out on DVD (see Studios OK Movie Downloads). Last week CinemaNow said it had raised an additional $20 million and secured distribution with satellite TV provider EchoStar (see CinemaNow Reels in $20M).

‘A Breakthrough’

But really, any online video company, including those such as Guba, BitTorrent, and Wurld Media, who have signed deals to sell studio content, would be happy to progress toward on-demand DVDs (see Guba Sells Sony Films, Guba Goes Hollywood, Warner Takes P2P Leap).

Guba Sells Sony FilmsWarner Takes P2P Leap

“Hollywood has been very reluctant for its movies to be burned, which really limits the attractiveness to consumers of downloading movies from the Internet,” noted Cynthia Brumfield, president of research firm Emerging Media Dynamics.

Ms. Brumfield called the Movielink-Sonic deal “a breakthrough.” Until movie downloads can “break free of the PC,” they will remain a novelty, she said.

Being able to burn downloads is likely to make legal online stores a stronger alternative to peer-to-peer file-sharing.

Emerging Media Dynamics does not yet compile market shares for online download stores because the sector is too small, said Ms. Brumfield.

Sonic, which was formed by a group from Lucasfilm in 1986, sells the software used to create much of the world’s DVDs, from professionally produced Hollywood titles to home-burned flicks.

Sonic had net income of $19.9 million in 2005 on $148.7 in revenue, up from about half that the prior year. Its shares were down $0.35 to $14.55 in recent trading.

As a sort of bonus to Movielink for being the first to sign with it, Sonic will include the Movielink service in its Roxio CinePlayer and other software.

Contact the writer:LGannes@RedHerring.com