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iTunes movies to hurt Apple, Disney?

updated 02:40 pm EDT, Mon September 25, 2006

iTunes movies questioned

Apple's recent deal with Walt Disney to offer full-length films as digital downloads via the iTunes Music Store could prove ill for both companies if other Hollywood studios view the deal as a competitive move, rather than an opportunity. A new report from the Los Angeles Times highlights the fact that Apple has only Disney on board offering full-length movies downloads -- a total of 75 films -- and that the Cupertino-based company's movie pricing currently undercuts major retailers such as Wal-Mart and Best Buy. Rival studios may also view the deal as a close-knit partnership between Apple and Disney, flagging the duo as a major competitor in the entertainment industry. Regardless, other studios are reluctant to come on board with Apple due to fears of alienating brick-and-mortar retailers, which account for half of Hollywood's revenue via DVD sales and rentals. "The other studios want to wait and see how it goes," said independent media industry analyst Harold Vogel. [corrected]

A recent report claimed that Wal-Mart was threatening Hollywood studios with retaliation if they went into business with Apple to sell full-length movies online, which the retail colossus fervently denied in a statement.

The other studios may also be holding out on Apple because they have already joined Amazon's Unbox service, which offers flexible pricing from studio to studio that is less likely to anger major retailers while also allowing studios to release movies online at their choosing -- such as after the first or second week of sales at retailer locations, when things tend to slow down. Amazon and Tivo are also in talks about allowing consumers to automatically transfer online movie purchases to their TiVo boxes, which could boost Amazon's online movie sales and compete with Apple's recently announced iTV device -- which will also stream downloads to a TV via a wireless connection.

Additionally, Disney's decision to plunge into the online movie business with Apple raises questions about the relationship between Apple CEO Steve Jobs and Disney, as Jobs also happens to be the largest shareholder of Walt Disney. Corporate governance experts suggest that Jobs has a conflict, and that Disney needs to play it safe.

"It's appropriate that both companies be concerned about the potential conflicts of interest when you have a shareholder and board member who also has an executive position at a customer, supplier or business partner," said Kirk Hanson, director of the Markkula Center for Applied Ethics at Santa Clara University.

Still, if Apple's movie download sales explode the doubts surrounding Apple and Disney's latest partnership will quickly disappear, likely resulting in further deals with other studios, according to the report. Disney recently announced that it had sold 125,000 movies via iTunes which brought in $1 million in revenue, and predicted that the company will make $50 million in sales during its first year in the business of offering movie downloads.




by MacNN Staff

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Comments

  1. gambit23

    Joined: Dec 1969

    0

    Hmm.... 

    That article makes one wonder if any REAL research was done.

  1. jarod

    Joined: Dec 1969

    0

    LOLLLL

    Anything to write a story. These reports and analysts become more pathetic everyday.

    Some people really deserve the idiot for life award.

  1. hayesk

    Joined: Dec 1969

    0

    Contradiction

    How can the write claim other studios are not selling through iTunes because of fear of backlash from brick and mortar retailers, and then claim that it may be because they are selling through Amazon?

    Well, which is it? It cannot be both.

  1. eldarkus

    Joined: Dec 1969

    0

    Hmmm...

    Ever been sitting around with your friends and just come up with something like "I wonder if Sharp Cheddar Cheese & Beer would taste good together?"

    I think thats what these guys do. So lets join them..

    What if all analysts were to shove a stake thru thier own heart.. Would they all die or would they come back to life with even less brain cells?

  1. Rezzz

    Joined: Dec 1969

    0

    The fud factor

    my guess is that they are afraid of itunes lock-in. offending retailers is unlikely at this point in the game. they know digital distribution ~will~ come. there's no stopping it. they're just scared and want to be sure they don't get painted into a corner. they want more competition from various on-line services. since apple has "demanding" sales policies, they're holding out; taking their ball and going home.

  1. godrifle

    Joined: Dec 1969

    0

    iTunes Users Unite

    Ask other studios to sell via iTunes.

  1. gambit23

    Joined: Dec 1969

    0

    re: rezzzz

    "my guess is that they are afraid of itunes lock-in. offending retailers is unlikely at this point in the game."



    Nah. My guess is that most of these media people were big MS supporters/Apple bashers who are now looking for something negative to say about Apple. The honest part is, there's really not much that can be said. Granted, there's room for improvement in many areas, but Apple's product line, momentum, and future look amazing. 

    You just have to remember that these guys are fans, too. They're just rooting for the opposite team.

    ....... and they're idiots.

  1. gambit23

    Joined: Dec 1969

    0

    Oh...

    All of the anylysts poo-pooing Apple's efforts would be jumping for joy and high-fiving each other if MS had Apple's current line-up.



    But they don't, so instead we do. 

  1. amacguy

    Joined: Dec 1969

    0

    Markkula Center...?

    Hmm...anyone else think its funny that this is coming from a center named after the guy who put up the $250,000 to get Apple off the ground and served as the company's chairman for over a decade?

  1. icecrystal23

    Joined: Dec 1969

    0

    Well Duh

    " and that the Cupertino-based company's movie pricing currently undercuts major retailers such as Wal-Mart and Best Buy"

    That's becuase you're getting no DVD, no extras, no subtitles, etc etc. You aren't getting as much, so why should you be paying as much?

    Let's get real, people.

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