Movies on iTunes?

[aved]

Apple Nears Deal for Feature Films on IPod
Plan Has Major Studios Divided
By Frank Ahrens
Washington Post Staff Writer
Thursday, September 7, 2006; Page D05

Apple Computer Inc. will soon begin selling feature-length movies online for viewing on its iPod devices, according to Hollywood sources, as the company hopes to duplicate its success with selling music through its iTunes digital store.

The service could be announced as early as Tuesday, when Apple has scheduled a "special event" of an undisclosed nature.

Apple's plan has roiled relations between Hollywood studios and big-box retailers such as Wal-Mart Stores Inc., which sell millions of DVD movies and see Apple's online distribution as a threat, said sources who spoke on condition of anonymity because the negotiations were ongoing. As a result, most of the studios are not joining Apple in its rollout but may join later.

The major studio fully on board is Walt Disney Co., for which Steve Jobs, an Apple co-founder, sits on the board of directors. The Disney studios include Touchstone Pictures and Miramax Films, and the group's releases include the "Pirates of the Caribbean" movies, the "Scary Movie" series and "Finding Nemo." It is unclear whether all Disney studios will supply movies to iTunes initially.

Executives of Vancouver, British Columbia-based Lionsgate Films said in an investors conference call this month that their company would begin selling movies on iTunes by the end of the year. Lionsgate is a small, independent studio but has produced the current box-office hit "Crank," as well as the "Saw" horror hits and the Showtime television series "Weeds," which iTunes already sells.

Other studios, such as Universal Pictures and Warner Bros., are not participating in the initial iTunes movie rollout, as details regarding movie pricing have not been worked out. Analysts are speculating the movie downloads could run as much as $14.99 per film.

Apple sent e-mails Tuesday inviting members of the media to an event in San Francisco on Tuesday. The invitation includes no specifics but hints at its purpose by showing an Apple logo in front of crossed searchlights and the slogan "It's Showtime."

Even though Apple's iPod was not the first -- nor, some argue, the best -- digital music device, the iPod and the iTunes Music Store kick-started the legal online music business by introducing an attractive, easy-to-use player and a simple, affordable way to buy songs. Analysts estimate that nearly 60 million iPods have been sold and 1 billion songs have been bought.

Apple added $1.99 video downloads of television shows and sporting events to its iTunes service in October, and the venture has experienced modest success. For example, ABC reports that more than 3 million downloads of its hit drama "Lost" have been sold on iTunes. As Apple struggled to fill holes in its music library, complicated digital-rights issues have been keeping iTunes' video library thin.

Though sales of digital songs through iTunes and other online services bolstered a music industry crippled by illegal downloading and high CD prices, Apple's reluctance to vary its 99-cent pricing has rankled some of the major record labels.

Apple's movie plans face similar resistance in Hollywood, which partly explains why most major studios have not signed up to contribute to the new iTunes service. The major movie and television studios have made billions of dollars on sales of DVDs over the past decade -- studios now get more money from DVD sales than from box-office receipts -- and are hesitant to disrupt the revenue flow by offering movies for sale online. The studios also would like to be able to vary online movie prices.

To further complicate matters, Wal-Mart is talking to movie studios and technology companies about the possibility of offering its own movie-download service, a company spokeswoman said.

So far, Apple's video offerings have been limited to half-hour and hour-long television shows and edited versions of sporting events. The iPod with the most storage space-- 60 gigabytes -- holds 15,000 songs or 150 hours of video. Storing a number of two-hour feature films would require even more space on the iPod's hard drive, so it is possible that Apple will roll out a new iPod with greater capacity. Also, the iPod's current 2.5-inch screen may prove too small for viewing feature-length movies, so a larger-screened iPod may be in the offing, as well.

Apple makes little money on song sales -- as much as 70 cents per song goes to the music company that holds the rights and to the musicians in royalties -- but the company has used iTunes to propel sales of the iPod, which costs as much as $399. Apple shipped more than 8 million iPods in the quarter ended in July, a 32 percent increase over the previous year, the company said.

In a note to investors, Shaw Wu, an analyst with American Technology Research Inc., said he anticipates that Apple will also use the Tuesday event to roll out an upgrade to the iPod Nano player and an Apple "smart phone."

[Trip]

Thanks for posting that, aved. It made for a great read while I take a break from homework.

I'm excited for the movie service and I'm pretty upset about the studios that are fighting against it. I know I would rather buy, and download, movies directly to my HD rather than go to my local store, buy a used version, and then rip it to my computer. Saving that much travel means a lot to me now that I'm constantly working or studying for school. The price tag does seem reasonable as well. Obviously not very affordable for a few selection of people, but one or two movies will most definitely be downloaded to my computer.

...That is, if the service really does make it's debute this Tuesday.

[Satcomer]

This proves to me one thing, analyst are just as poor as any of us Mac users at Apple speculation. The one thing you can count on is Apple's stock going up until September 11th then tanking on September 12th.

[pantosj]

Let me get this right, they expect people to pay $15 to download a DVD movie that could be picked up for free at the local library or rented for $3 at the video shop and then copied?

The market won't bear such folly.

[aved]

Originally Posted by pantosj

Let me get this right, they expect people to pay $15 to download a DVD movie that could be picked up for free at the local library or rented for $3 at the video shop and then copied?

The market won't bear such folly.

Yeah I think the only chance of making it successful would be to offer movies before they are released on DVD.

[Trip]

I don't agree with that theory, pantosj. I think that people with pay to have it downloaded. Like I said in my previous post: I'll occasionally buy from an online movie store if I don't want to (or can't) take the time to drive to the library/redbox/store.

It seems more convenient to me (and I'm sure there are millions of others out there that will agree) to just click "buy now" on an online store than to drive to the local redbox, type in a code (to get the movie for free), drive back home, spend an 20 minutes ripping the DVD, and then driving back to drop off the movie.

I guess what it comes down to is individual needs and wants. While there may be thousands of people who prefer to get the movie for free at the library, there are equally thousands who prefer to download it from Apple.

[MnM]

I love the idea of buying and downloading movies online. My main problem is quality and size. I have a full screen 32 inch television(many people have larger tvs- 42,50 inch wide screen etc) where I play music videos i downloaded from the itunes music store. I play the video on the ipod and then using the apple av cable to play it to the tv. The video quality is extreemmely poor when stretched to 36 inch. Even on my 20 inch apple display the quality is bad when stretched.

If i'm going to pay 15 dollars for a movie, I should be able to watch it on my ipod and my tv with quality being good in both areas. its no longer a movie for my ipod, its a movie for home(tv / computer). It will become and online video store and so quality should not just be for your ipod.

The main problem with this is the download size and bandwidth. Apple will try to give you a quick download to save on bandwidth which will result in lower quality. I hope apple does not do this and use part of my 15 dollars to pay for more bandwidth and give me higher quality. These days just about everyone has cable/dsl so I see no reason why we shouldn't have higher quality. I put up with it for a 3 min music video but can't see myself watching something like that for 2 hours.

[fryke]

Only because one *can* "get" a DVD from a library and copy it to his/her computer doesn't make it legal, btw. - and you have to take this into account. Also: Only because you don't think you'd ever use a service doesn't mean it wouldn't work. Heck: Those DVD rental services exist for years, I've never used them - because I want to own a DVD - and still they somehow survived.

I personally hope that videos would be at _least_ 640px wide, because that's the least acceptable resolution for viewing stuff on a bigger screen. I don't expect them to go HD (720p), but DVD resolution would be nice. If this is going to be 320*240px iPod 5G resolution, I don't expect it to be a big hit, either. But they're not dumb, are they.