RealNetworks, Inc. (NASDAQ:RNWK) should have saw this coming when they release their new controversial RealDVD software.  While RealPlayer already allows you to download any video from YouTube or powered by Flash, RealDVD allows you to rip DVDs and make back up copies.  RealDVD was officially launched today.  Six major studios announced that they are suing the software company over the software.

These studios believe that many of Netflix and Blockbuster’s customers would just burn the movies that they rent with the RealDVD software, thus causing them to lose out on a great deal of money.  The lawsuit was filed at the U.S. District Court in L.A. 

“The incentive for the consumer is obvious and all but overwhelming,” stated a request by the movie studios.  The request was for a temporary restraining order. “‘Why,’ he or she may ask, ’should I pay $18.50 to purchase a DVD when I can rent it for $3.25 and make a permanent copy?’”

RealNetworks defends their software by saying it is legal.  RealDVD is sold for $30 per consumer at $20 for up to four licenses after that.  The software copy is locked into the original owner’s hard drive and does not alter the encryption technology used by movie studios already.  Copying one’s own personal copies of a DVD is “fair use” by law. 

The movie studios stated that RealDVD violates the Digital Millenium Copyright Act to bypass technologies that prevent the copying of a DVD without permission of the copyright owners.  The movie studios that are suing RealNetworks includes Viacom, Inc. (NYSE:VIA)’s Paramount Pictures, Sony Corporation (NYSE:SNE)’s Sony Pictures, News Corporation (NYSE:NWS.A)’s 20th Century Fox, General Electric (NYSE:GE)’s Universal, The Walt Disney Company (NYSE:DIS) studio, and Time Warner Inc. (NYSE:TWX) Warner Bros.

In the first social network and movie production deal of it’s kind, Paramount has partnered with Bebo.  Paramount movie, “Angus, Thongs, And Perfect Snogging” (ATPS) will be rolled into Bebo web drama, “Sofia’s Diary.”  Georgia Nicolson, character of ATPS will be appearing in two episodes of Sofia’s Diary. 

In Sofia’s Bebo profile, she inteviews Georgia to find out why teenagers are obsessed with Georgia’s life.  Sofia then starts watching Georgia’s video blog posts and interviews others through the Bebo messaging service.  Before the deal happened, Georgia’s profile was created to allow users to get to know her. 

MeC Interaction is the advertising agency that brought Bebo and Paramount together.  “A format such as ‘Sofia’s Diary’ offers a unique opportunity for advertisers and consumers to engage on this level because they can’t do this on television,” stated Carl Reid, account director at MeC.

AOL acquired Bebo for $850 million in cash 5 months ago.

Related Links:
1. Bebo.com
2. Paramount.com
2. InformationWeek

Blockbuster Inc. announced today that they would be acquiring Movielink LLC.  Movielink provides customers access thousands of movies that can be rented or purchased online.  Movielink is a joint venture between Paramount, Sony Pictures Entertainment, Universal Pictures, Metro-Goldwyn- Mayer Studios, and Warner Bros.

“Blockbuster is committed to keeping pace with the changing needs of customers by offering them an expanding array of convenient ways to access entertainment content,” stated Jim Keyes, the Blockbuster Chairman and CEO. “Our acquisition of Movielink, with its associated digital content, is the next logical step in our planned transformation of Blockbuster. Now, in addition to the entertainment content we provide through our stores and by mail, we have taken an important step toward being able to make movie downloading conveniently available to computers, portable devices and ultimately to the television at home.”

Blockbuster won’t be changing the operations of Movielink but will be making elements of the service available on blockbuster.com.  Movielink was started in 2002.