Showing signs that Hollywood is becoming a bit more comfortable with the digital domain, five major studios have teamed on a new on-demand movie distribution service that relies heavily on broadband connections.

Those studios–Metro-Goldwyn-Mayer Studios, Paramount Pictures, Sony Pictures Entertainment, Universal Studios and Warner Bros.–formed a joint venture that will offer a "broad selection" of motion picture titles to high-speed Internet users in the United States. Partners in the deal have yet to say when the service will launch.

However, the new offering, dubbed "MovieFly," will tap an "open-access" Internet protocol-based system, though other delivery methods will also be explored, the studios said, adding that movies offered via the service will include both recently released and archived titles. The studios will also make the service available to other film producers and distributors, which will determine release windows and pricing on an independent basis.

Movie studios have feared that without the proper copyright protection, the digital distribution of their content could be vulnerable to pirates.

The studios said they would employ an "appropriate" level of copyright protection for Internet distribution, and employ the latest digital rights management software.

While studios appear to be loosening their stance on the digital delivery of their titles, which could bode well for the VOD sector, streaming of top-flight theatric titles via the Internet could potentially subvert cable's existing pay models, warned Patti Reali, senior broadband telecommunications analyst for Gartner Dataquest.

Still other industry observers said just the presence of a studio-run, Web-based VOD service could give moviemakers additional leverage when they negotiate revenue splits with cable operators.

In related moves, In Demand recently inked VOD content deals with Universal Pictures and Sony-owned Columbia TriStar International Television.