OMEN
05-02-2008, 11:30 AM
Sells downloaded movies same day as DVD release date, but the move contains a 'major strategic error,' analyst says
Apple Inc. today said it had struck deals with several major movie studios to sell movies on its iTunes download store the same day that the films hit the street on DVD.
New and backlist titles from Paramount Pictures, Sony Pictures, 20th Century Fox, Walt Disney Studios, Warner Bros., Universal Studios and others will post on iTunes the day they are issued on DVD, Apple said.
"This is a strategic victory for Apple, which has had an up-and-down relationship with the industry," said Aram Sinnreich, a media analyst at Radar Research, referring to a dustup last year when Apple and NBC Universal couldn't agree on fees for the latter's television shows. "This vindicates Apple's work to make iTunes the vehicle for digital delivery of all kinds of content."
Today, for instance, iTunes listed 27 Dresses and The Diving Bell and the Butterfly for purchase download; both went to DVD on Tuesday, the industrywide weekly release day. Some just-released films, however, such as The Golden Compass, are not yet available on iTunes because they're produced by studios that haven't made deals with Apple. The Golden Compass was made by New Line Cinema, which is owned by Warner Bros., but others, including Scholastic Productions and three other smaller studios, were also involved.
One of the most notable absentees from the iTunes list was MGM, but numerous boutique and independent studios were also missing. That shouldn't be a problem, said Sinnreich. "There is a critical mass of content," he said, and the missing pieces probably won't hamper download sales.
The news was expected after Time Warner CEO Jeffrey Bewkes said yesterday that his company's Warner Bros. studio would release movies for video-on-demand systems on the same day that the films are sold on DVD. The practice is dubbed day-and-date, and puts pressure on traditional sales channels that rely on the several-week window between DVD and on-demand or download availability.
"We've known for the better part of a decade that the traditional distribution windows were collapsing, just like the house of cards they were," Sinnreich said. "And this is absolutely a substantial threat to brick-and-mortar. It's why we've seen them get into the digital game. But I don't think the value of brick-and-mortar will disappear, regardless of how digital the product is."
Local customer service, something that iTunes can't provide, will remain a critical part of the value of businesses like Blockbuster, he said.
Sinnreich cautioned that although Apple's move was smart, it also contained what he called a "major strategic error," specifically that the movies downloaded from iTunes are tied to Apple and its products with anticopying technology.
"Consumers may think they're paying $15 to actually own something, but they're simply going to be licensing it," Sinnreich noted. "Their ability to view it will be hindered by their inability to transfer it out of the Apple universe." Digital rights management, or DRM, concerns have regularly been voiced by analysts and consumers, who want to be able to watch or listen to something they've bought by download whenever they want, wherever they want and on more than one platform.
Apple responded to the criticism last year when it began selling DRM-free music tracks on iTunes.
"This is only a distant rumble right now, but consumers will be incredibly upset when the next big thing comes along and they realize that the hundreds or even thousands of dollars they've spent on downloaded content won't transfer," Sinnreich said.
"Even the Roman Empire fell," he said, talking about the inability of even Apple to maintain a lock on the digital content business indefinitely.
Apple's iTunes charges $14.99 for new releases and $9.99 for most backlist movies. More recently, the online store, which is best known for selling music to iPod owners, added movie rental downloads. For $2.99 to $4.99, customers can download movies and watch them during a 24-hour period up to 30 days after rental.
Movie purchases, which are available only by U.S. customers, require iTunes 7.6.2 on either Windows or Mac OS X.
Compworld
Apple Inc. today said it had struck deals with several major movie studios to sell movies on its iTunes download store the same day that the films hit the street on DVD.
New and backlist titles from Paramount Pictures, Sony Pictures, 20th Century Fox, Walt Disney Studios, Warner Bros., Universal Studios and others will post on iTunes the day they are issued on DVD, Apple said.
"This is a strategic victory for Apple, which has had an up-and-down relationship with the industry," said Aram Sinnreich, a media analyst at Radar Research, referring to a dustup last year when Apple and NBC Universal couldn't agree on fees for the latter's television shows. "This vindicates Apple's work to make iTunes the vehicle for digital delivery of all kinds of content."
Today, for instance, iTunes listed 27 Dresses and The Diving Bell and the Butterfly for purchase download; both went to DVD on Tuesday, the industrywide weekly release day. Some just-released films, however, such as The Golden Compass, are not yet available on iTunes because they're produced by studios that haven't made deals with Apple. The Golden Compass was made by New Line Cinema, which is owned by Warner Bros., but others, including Scholastic Productions and three other smaller studios, were also involved.
One of the most notable absentees from the iTunes list was MGM, but numerous boutique and independent studios were also missing. That shouldn't be a problem, said Sinnreich. "There is a critical mass of content," he said, and the missing pieces probably won't hamper download sales.
The news was expected after Time Warner CEO Jeffrey Bewkes said yesterday that his company's Warner Bros. studio would release movies for video-on-demand systems on the same day that the films are sold on DVD. The practice is dubbed day-and-date, and puts pressure on traditional sales channels that rely on the several-week window between DVD and on-demand or download availability.
"We've known for the better part of a decade that the traditional distribution windows were collapsing, just like the house of cards they were," Sinnreich said. "And this is absolutely a substantial threat to brick-and-mortar. It's why we've seen them get into the digital game. But I don't think the value of brick-and-mortar will disappear, regardless of how digital the product is."
Local customer service, something that iTunes can't provide, will remain a critical part of the value of businesses like Blockbuster, he said.
Sinnreich cautioned that although Apple's move was smart, it also contained what he called a "major strategic error," specifically that the movies downloaded from iTunes are tied to Apple and its products with anticopying technology.
"Consumers may think they're paying $15 to actually own something, but they're simply going to be licensing it," Sinnreich noted. "Their ability to view it will be hindered by their inability to transfer it out of the Apple universe." Digital rights management, or DRM, concerns have regularly been voiced by analysts and consumers, who want to be able to watch or listen to something they've bought by download whenever they want, wherever they want and on more than one platform.
Apple responded to the criticism last year when it began selling DRM-free music tracks on iTunes.
"This is only a distant rumble right now, but consumers will be incredibly upset when the next big thing comes along and they realize that the hundreds or even thousands of dollars they've spent on downloaded content won't transfer," Sinnreich said.
"Even the Roman Empire fell," he said, talking about the inability of even Apple to maintain a lock on the digital content business indefinitely.
Apple's iTunes charges $14.99 for new releases and $9.99 for most backlist movies. More recently, the online store, which is best known for selling music to iPod owners, added movie rental downloads. For $2.99 to $4.99, customers can download movies and watch them during a 24-hour period up to 30 days after rental.
Movie purchases, which are available only by U.S. customers, require iTunes 7.6.2 on either Windows or Mac OS X.
Compworld