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iTunes Showcases Disney Movies

12 Sep, 2006 By: Jessica Wolf

Apple Computer's Steve Jobs Sept. 12 unveiled the company's spruced up line of iPods and a new download lineup of feature films from the Walt Disney Company.

Apple's new video-enabled iPod boasts a stronger battery at 3.5 hours for video playback, compared to just two with the previous incarnation. With an 80GB hard drive it also comes with substantially more storage than the highest prior capacity of 60GB, but with the same $349 price tag. There's also a new 30GB option priced at $249 — $50 less than the earlier model.

The screen size is the same as the previous version for the new video players, but is 60% brighter.

As Jobs was announcing the new plans in San Francisco, the company's iTunes store went on hiatus, with just a black screen popping up with the words: “It's Showtime: The iTunes Store is being updated.”

Apple also announced it is using upgraded compression technology for new downloads.

Sept. 13, iTunes version 7 went live, with a sleek new color palette and movie-buying page with 75 titles from Disney, Pixar, Touchstone and Miramax. New releases are priced at $12.99 for preorders and during the first week of sale, $14.99 after that. Catalog titles are $9.99.

The top 10 selling movies the first day were a mix of family-friendly releases and grown-up actioners, dramas and comedies. In order, the top movies listed on iTunes were Pirates of the Caribbean: The Curse of the Black Pearl, National Treasure, The Incredibles, The Hitchhiker's Guide to the Galaxy, The Life Aquatic, The Wild, Flightplan, Gone in 60 Seconds, Good Will Hunting and O Brother Where Art Thou.

If Amazon.com's announcement of its digital movie download servivce Unbox was the worst-kept secret in Hollywood, Apple's was the second-worst. For weeks, the industry has been waiting for the company to announce its feature film download service, fully expecting that service to be stocked with Disney product. Meanwhile, Disney titles are missing from Amazon.com's new offering.

The studios have loosened the reigns on digital content of late, but unlike the music market and the rampant peer-to-peer filesharing that pre-dated legitimate download services — with video there's still time to experiment and perfect, said Russ Crupnick, analyst with NPD Group.

“It's not like [the video market] is corroding around them, like it was for music,” he said.

It's also clear that content holders see how huge of a shadow Apple is already casting on the digital video market, he said. Apple already commands 88% of the legitimate music download business, according to the company, and has garnered 35 million video downloads.

The marriage of Disney content and the iTunes platform has always been obvious, as the companies share Jobs. The iTunes TV download service started with just Disney content such as TV shows “Lost” and “Desperate Housewives,” arguably launching the Internet episodic download craze.

More studios are likely to sign on with Apple, Crupnick said.

“It's inevitable that if you look at the landscape right now, Apple has the potential to stake out the leading position in video,” he said. “I think the obvious concern of the studios is that market dominance, that pricing power, they're ceding a lot of power to Apple.”

Several studio executives, speaking on background, shortly before Apple announced its new movie offerings, downplayed iTunes TV downloads.

They see the wave of the future for episodic TV on the Internet shifting to a more traditional free-to-view ad-based model via proprietary Web sites and streaming video.

“It's the standard broadcast business model migrating to the Internet,” one studio executive said. “You buy ad time that covers your product both on commercial television and on the Internet.”

Meanwhile, it's still in question as to how much feature-film content most people actually want to view on those small iPod screens, Crupnick said.

“It's important to remember that people are not essentially unhappy with the DVD format,” he said. “There's no huge hue and cry for digital necessarily.”

The younger demographic and teen market are the most obvious and prolific users right now, and while that stands to remain true for some time, it doesn't mean the current digital download business model is actually fully representative of true consumer demand.

“In a sense, [the iPod] is basically a fashion accessory to an entire generation,” he said.

But even given that, you can't discount the affect it has had, he said.

“I don't think you can put the genie back in the bottle,” he said. “This is a generation that's grown up with digital, it affects their value propositions, their buying decisions.”

Apple's iTunes is catering to that younger demographic by now also offering game content, including versions of Bejeweled, Mahjong, mini-golf, Pac-Man, Tetris, Cubis, Texas Hold 'Em, Vortex and Zuma.

Next year's big company initiative for Apple is the tentatively named "iTV," which would allow users to download content from iTunes, then connect their Mac or PC wirelessly with the television set.

That's important on a broader scale, said Ross Rubin, hardware analyst for NPD group.

“It's less relevant to the iPod business itself,” he said. “It's really more of a larger entertainment picture, particularly that battle for the living room, which [Apple] is starting to enter in a substantive way.”

Apple also announced its second-generation lineups of music-only players the iPod Nano and Shuffle. The new Nanos go back to offering color options (pink, blue green and silver) and have upgraded battery life (24 hours compared to 14). Nano comes in 2GB, 4GB and 8GB options priced at $149, $199 and $249, respectively. The new Shuffle comes in an aluminum case with a belt clip at $79.

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