From Bloomberg News...

MovieFone Braces for "Phantom Menace' of Online Buyers

New York, May 10 -- MovieFone Inc., the largest U.S. movie ticket service, is bracing for the Phantom Menace of online businesses, an onslaught of demand that could cripple service as fans seek tickets for the latest Star Wars movie.

Surges in demand has caused interruptions in service at Internet companies ranging from brokerage E*Trade Group Inc. to auctioneer eBay Inc. MovieFone, which is being acquired by America Online Inc., risks being the latest victim of its own success.

MovieFone will be the sole distributor of tickets over the Internet for Lucasfilm's ""Star Wars: Episode I - The Phantom Menace,'' when they go on sale Wednesday. The company, known for its ""Hello, and Welcome to MovieFone'' telephone greeting, has prepared for the expected demand for the much anticipated movie by doubling its computer capacity. Still, MovieFone Chief Executive Andrew Jarecki concedes performance may suffer.

""Everyone is anticipating it will be hairy on the first day,'' says Jarecki. ""There will be a lot of disappointed people, but imagine if people had to stand in line for hours like they did in the 70s, just to be turned away.''

The latest film in the Star Wars series will benefit from the almost cult-like devotion of fans to the movies. Jarecki is preparing for the likes of Joe Lazzaro.

""We're forming a ticket posse in the office,'' said the 24- year old programmer from Pasadena, California. ""We'll have a group of people hit the ticket site, and the first one to get in will buy tickets for everyone.''

Analysts expect ""The Phantom Menace,'' which is slated to open on May 19, to be one of the biggest revenue generating movies ever. The movie, distributed by New Corp.'s 20th Century Fox studio, almost didn't make it to Internet ticketing.

""Originally we weren't going to do it, but the theater owners asked us to please reconsider, so they could accommodate'' more people, said Tom Sherak, chairman of Fox's film group. ""It lets families tell their children they have tickets.''

One thing seems certain: the crowds seeking tickets for opening night will be a force to contend with.

One-third of all Americans plan on seeing ""The Phantom Menace,'' according to a Newsweek poll that was taken by Princeton Survey Research Associates. The survey found that 11 percent of people planning to see the movie right away will try to get their tickets over the Internet.

""In a good week, we see one million users, so in a good day we probably get a few hundred thousand,'' said MovieFone's Jarecki. ""It will be a multiple of that, but it's impossible to speculate.''

Each sale also means increased revenue for New York-based MovieFone, which charges a commission of between $1 and $1.50 per ticket. It will also take orders for the tickets by phone.

Shares of MovieFone rose 4 to 43. The company's shares are up more than fourfold in the past year.

MovieFone's World Wide Web site will open up purchases to people who live outside the U.S. and who don't want to or can't spend time waiting in line at a movie theater, said Forrester Research analyst Mark Hardie, who covers entertainment events over the Internet.

""You'll have people buying tickets abroad, and flying here to watch the movie. For college kids, this will be a road trip,'' said Hardie.

A slowdown on MovieFone's Web site probably won't hurt MovieFone in the long run, said analysts. That's because the Star Wars hype will draw thousands of first-time users, and those consumers are likely to return to buy tickets for other movies.

Die-hard fans shouldn't rely on the Web alone, advises MovieFone's Jarecki, who plans to buy a ""Phantom Menace'' ticket for a charity screening that benefits Sloane Kettering Hospital in New York.

"My advice is to be on the phone at the same time as the Web site. It's prudent for anyone trying to get tickets,'' he said.