Key to movie rentals: to a flash, in a flash

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When Mark Cuban proclaims that "the Internet is dead and boring," as the entrepreneur did recently, it's easy to dismiss such a histrionic assessment. But there's no denying a grain of truth to his underlying rationale. As he explained soon after whipping the blogosphere into a frenzy, there is so little investment in the Internet's infrastructure that the bandwidth for DVD-quality film online will be unacceptably slow for a long time to come.

But if Cuban happens to find himself this fall in Galway, Ireland, he could stumble upon a promising workaround solution to the problem. Dozens of kiosks will begin popping up in that city, the backyard to a small technology company, PortoMedia, that is attempting an interesting end run around the Internet. IBM, Samsung and Toshiba have come to the aid of Porto in the development of a DRM-friendly rental alternative to Blockbuster or CinemaNow that is starting to get noticed by the major studios.

Porto's kiosks, which will be installed in retail locations all over Galway, allow consumers to download movies to a flash memory card in just 15 seconds (at a rate of 1.5 gigabytes per second). The so-called "movie key" can then be plugged into the USB port of a computer, television monitor or mobile screen for viewing on the go or in the home.

Founder and CEO Chris Armstrong sees Porto establishing a third business model for movie distribution. "Online downloads will definitely be in the future, and the physical DVD will last longer than people anticipate," he says. "But you'll also have a kiosk model. I think we will live on as a part of the business long after the online download has arrived."

There's some clear advantages to this mode of transaction. It not only laps Internet-borne delivery, but it also moves faster than a similar crop of new businesses that enable kiosks to burn DVDs, which can take as much as 15 minutes per disc. Porto kiosks are also easier to disperse than entire brick-and-mortar operations, not to mention the fact that they can offer more inventory without chalking up steep overhead costs.

Best of all: no late fees. There's no need to even return a film because it will expire after a predetermined period. Porto even could become more than just a rental mechanism, with electronic sell-through also possible for allowing consumers to purchase titles.

Could minuscule memory sticks become a fixture on a movie lover's key chain? Perhaps. In time, Porto could offer consumers titles available day-and-date with home video releases, and at a price point competitive with DVDs.

Research firm In-Stat noted the potential of what it refers to as "luggable" media to become a $25 billion business worldwide by 2010, singling out PortoMedia as an "excellent example" of the technology.

That said, Porto is looking to elbow its way into a distribution picture that also includes cable VOD and mail services like Netflix. These are tricky times for movie studios, which are carefully considering their options.

Porto has lined up high-profile technology partners to stay in the mix: IBM is providing back-office technology, Toshiba is producing the kiosks, and Samsung is constructing the flash key.

Armstrong also has some industry veterans on its board of directors to press the case for Porto, including Lindsay Gardner, former president of affiliate sales and marketing at Fox Cable Networks, and Tim Shriver, a film producer whose credits include "Amistad."

If tests are successful, Porto's kiosks will make their way from Galway into the rest of Ireland, the U.K., Scandinavia and eventually the U.S.
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