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Apple May Be Testing the Waters for Film Downloading Service

By Gene Koprowski MacNewsWorld ECT News Network
Mar 9, 2006 5:00 AM PT

Apple Computer may be working up plans to jump into the online movie downloading market. Last month, market research survey firm Coyote Insight, based in Fullerton, Calif., distributed a poll about a forthcoming iTunes movie service poised to deliver on-demand access to movies that could be downloaded to an iPod or a computer. The survey indicated the service would be offered on a monthly subscription basis.

Apple May Be Testing the Waters for Film Downloading Service

However, with players like CinemaNow, TotalVid and -- as well TiVo -- already there, entering the motion picture distribution arena may not come as easily for Apple as the move into music downloads did.

The iTunes service would provide access to 1,000 movies on demand. Customers would be able to download them to a computer and, in turn, to a video iPod -- or even to a television connected to a computer, according to the survey. Consumers would need to have a broadband connection to the Internet to receive the service for a fee of perhaps US$9.99 per month. Viewers would also be offered the option of buying the movies via the Apple service.

Coyote confirmed that it had indeed conducted the survey, when contacted by MacNewsWorld, but said a nondisclosure agreement prevented it from saying more. Apple did not respond to a request for comment.

Challenges Ahead

Apple may have several challenges ahead. When it jumped into the Internet music downloading scene a few years ago, the industry was still embroiled in legal tangles, with pirated song sites siphoning revenues from legitimate record companies. Today, Apple's site is flourishing, and competition is just now emerging from mobile phone companies seeking to offer songs in addition to ring tones.

The scenario is different for distributing video and movie content online. Consumers are only now warming to the idea of downloading movies and TV shows from the Internet onto their iPod. Apple reckons that it can go where no competitor has gone before and conquer the nascent market.

Emerging Market

Apple's service probably will offer full-length feature films for download, Shaw Wu, a researcher at American Technology Research, told MacNewsWorld.

In order for the plan to work, said Gene Munster, a research analyst for PiperJaffray, Apple needs to have a wireless base station with video transfer capabilities to help push it into everyone's living room.

Consumers are just now starting to pay for movies to download online. More than 40,000 copies of the film "Elizabethtown," starring Kirsten Dunst, were downloaded through file-sharing services in January of this year, according to BayTSP, a research firm.

TV shows appear to be more popular and, moreover, are often available for free. Episodes of popular programs like "24," "The O.C." and "Desperate Housewives" are already available online.

Many Internet users have fast broadband connections and can employ software such as BitTorrent, for example, that makes it easy to download the material. Some consumers prefer downloadable TV shows to movies, because TV shows are typically shorter and thus can be downloaded more quickly and stored on a single DVD.

The User Experience

Major movie companies like Walt Disney and NBC Universal have already struck deals to license their most popular shows through Apple's iTunes. MTV and Comedy Central are also doing the same.

When it comes to movies, however, many players have been in the market for some time and have had a chance to garner market share. "CinemaNow customers can download or stream movies on the Web anytime, anywhere, in a variety of quality formats and online payment scenarios," said Helen Tse, a spokesperson for Nine Systems, based in San Diego, Calif. In fact, she adds, more than 250 of the world's leading brands are already selling video content -- including movies -- online.

A lot of these sites are niche players, though -- like, a provider of do-it-yourself, martial arts and sports instruction videos for the Internet, priced at $2 to $4 -- and many potential customers are unimpressed with the movie download offerings currently available.

"I have used it. It is easier to go to Blockbuster," technology marketer Steve Wright said of's service.

Perhaps what Apple is hoping for is that -- much like it has done with music via iTunes -- it can provide a user experience that rivals all others. Such an approach could be key to its success.

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