Studios Embracing Apps — Carefully

16 Apr, 2010 By: Erik Gruenwedel

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Despite the rush by third parties to create apps for the Apple iPad tablet computer, home entertainment studios remain largely spectators to the evolving technology.

A burgeoning byproduct to the success of the iPhone, an app represents a Web application that is accessed via a browser over a network such as the Internet.

To third parties, apps represent a proprietary calling card for commercial and altruistic aspirations on Apple’s coveted platform, which includes iTunes and the App Store. The App Store currently has more than 150,000 apps, of which about 75% are gaming related.

There are about 3,000 apps unique to the iPad, although existing Apple apps can be downloaded to the iPad, with varying success.

Among the major studios, launching studio-specific iPad apps appears to be tentative — or nonexistent.

Sony Pictures will soon bow an app for the iPad earmarked to promote upcoming theatrical releases, according to a spokesperson. Separate apps for Sony-produced TV shows “Wheel of Fortune” and “Jeopardy” are also pending.

Universal Studios Home Entertainment spokesperson Lea Porteneuve said iPad users could access the studio’s existing pocketBLU app, which heretofore allowed iPhone/iTouch owners to control their Blu-ray Disc players and engage in Web-based content via a Blu-ray movie.

Phil Leigh, analyst with Inside Digital Media in Tampa Bay, Fla., said studios would favor making content available through iTunes for incremental transactional revenue rather than for free through an app.

“If the studios want to provide movies and TV shows for the iPad, they want consumers to buy or rent it through iTunes,” Leigh said.

He doesn’t envision studios rolling out apps that allow consumers to rent or buy content directly due to the cannibalistic effect on iTunes, packaged media and other established distribution channels.

Leigh said he remains intrigued whether Hulu will be successful in offering an iPad app, which is widely considered to be an ongoing project for the repurposed TV programming Web site co-owned by Disney, NBC Universal and News Corp.

With Apple not supporting Adobe Systems’ industry-standard Flash video platform, companies such as Hulu must create apps that allow iPad/iPhone users to view video content.

“Since Hulu is an ad-supported business model, Apple might be reluctant to allow a direct competitor to iTunes on its platform via an app,” Leigh said.

However, Apple did create an app for YouTube videos, underscoring the social network’s clout, according to Leigh.

Blockbuster is working to develop a specific iPad app that mirrors its iPhone app that allows users to manage by-mail rental queues and locate in-store rentals.

“We want to work towards allowing customers to download and watch movies on [the iPad] similar to what they can do right now through the other Blockbuster On Demand offerings,” said Blockbuster spokesperson Michelle Metzger.

Netflix, of course, scored a coup of sorts when its app was offered during the initial launch of the iPad, and for a time ranked among the top three downloaded free apps. The online DVD rental pioneer also is working to develop an app for Android-based devices and created by Google.

A Redbox spokesperson said the kiosk vendor is working on assorted apps for mobile devices, including the iPad.

Colin Sebastian, analyst with Lazard Capital Market in San Francisco, said content creators — while treading carefully with apps and emerging platforms over the Internet — at the very least need to have an interactive presence to engage consumers.

“Maybe you have a ‘lite’ app that has content related to a movie or TV show, but at the same time you are generating a consumer lead and continuing to engage your audience,” Sebastian said.

He said the business models online remain “prickly,” but consumer technology and media companies are employing apps as promotional vehicles on the iPhone with content related to a franchise or new project.

“From Netflix’s perspective, they want to reach their customers wherever they are,” Sebastian said. “And whether that is through the browser, the Xbox, iPhone or iPad, is immaterial.”

He said the percentage of free apps would continue to proliferate compared to fee-based apps, despite the fact consumers are comfortable paying for access.

“The trick is figuring out how to monetize an app, which can be more successful than an advertising revenue-based model,” Sebastian said.

Indeed, Warner Bros. Digital Distribution earlier this month launched the interactive game “Sherlock Holmes Mysteries” as a $2.99 iPad app to coincide with the DVD/Blu-ray Disc release of Sherlock Holmes, starring Jude Law and Robert Downey Jr.

Leveraging the iPad’s 1024x768 screen resolution, users are subjected to 11 immersive 3D environments as they work to solve a virtual case in the gritty side of the 1890’s Victorian London.

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