VIRTUAL VIDEO STORE
The VVS Set Top Box allows the owner to download and view Hollywood movies and other video content on their television over high-speed Internet Protocol. VVS has agreements that make movies from major motion picture studios available as soon as they are released on DVD.

This is the next generation for in-home movie viewing and is destined to replace much of

the DVD sales and rental market. The software and accounting package allow retailers of the set-top boxes to share in the revenues of the movies, thereby replacing revenue streams that will be lost from declining sales and rentals of DVDs. A number of retail partners have been secured, while North America’s largest DVD retailers have expressed an interest to participate.

PRODUCT DESCRIPTION
Content-On-Demand in the form of movies and other video programming direct to the home has been a holy grail for a number of years. Today, thanks to developments such as the prevalence of high-speed internet, new and improved compression systems and ultra-large database management protocols, this industry is on the verge of explosive growth.

Virtual Video Systems have been the first to fully realize this opportunity. They have developed a proprietary set-top box which is being sold at retail. The box utilizes the high-speed internet connection to download and stream the movie to the television.

With a typical high-speed connection, by the time the trailer that precedes the feature has played (under 2 minutes), the movie is ready to play. The movie is then available for viewing for 24 hours before it disappears from the set top box storage area. It can be watched an unlimited number of times within that period.

Virtual Video Systems has entered into contracts that make movies from major motion picture studios including MGM, Alliance, Dreamworks, 20th Century Fox and Universal available as soon as they are released on DVD. This is a major departure from the previous release schedule of first-run movies, which until recently, had a significant time delay between DVD release and availability for download viewing.

The proposed cost for new Hollywood features is $5.49, and library features and television shows about $2.99. An easy-to-use on-screen menu allows the viewer to select programming by title, actor, director, category and other key words. Billing goes directly to a credit card.

TARGET MARKET
The target market is anyone in North America who buys or rents DVDs and has a high-speed internet connection. Viewers will enjoy an unprecedented selection of hundreds of thousands of titles and greater convenience. No need to drive to the rental store, to rent and then return DVDs, no annoying late fees, and 24/7 availability of instant first-run entertainment.

POTENTIAL PRODUCT USERS
Product users are anyone looking for on-television in-home entertainment. Aside from the enormous residential market, this will also find audiences in hospitals, senior citizens homes and other institutions.

THE MARKET
We will compete for consumers spending in home entertainment, most specifically video sales and rentals. DVDs entered North American households at a record pace, reaching 80% penetration in under 5 years.
Currently this area is dominated by major big box retailers like Wal-Mart and Best Buy for DVD sales, and chains such as BlockBuster, Videotron, Rogers, Hollywood Movies etc. for rentals.

Cable and satellite operators offer video on demand, but do not promote the service extensively. Capacity of their systems constrains these operators from creating too much demand, as optimum bandwidth utilization limits their service capacity.