Movie studios fear the sequel to iPod

Some movie fans hope Apple TV will do for Internet video what the iPod did for digital music.

That's precisely what some Hollywood executives are afraid of.

The device from Apple Inc., which debuted this spring, aspires to bring movie downloads from the geeky fringe to the living room. Touted as elegant and easy to use, Apple TV lets movies and TV shows bought through Apple's iTunes online service -- plus, later this month, videos from YouTube -- pass from computers to television sets. It also lets users watch their digital photos and home videos on their TVs.

But despite Apple TV's promise, some of the biggest movie studios won't sell their films through Apple's iTunes store. They fear that the Cupertino, Calif., company will come to dominate online distribution of movies as it now controls more than 70% of the digital-music market in the United States.

If it does, that could drive down the prices of newly released DVDs, which is great for consumers but bad business for the movie studios. Even more threatening to the studios is the possibility that iTunes could kill the premium they hope to collect for the new generation of high-definition movie discs.

These concerns about Apple TV have kept most of the major movie studios from signing deals to sell films through the companion download service, iTunes. Missing are movies from Sony Pictures, 20th Century Fox, Universal Studios and Warner Bros.

So far, only Walt Disney Co. has ponied up new releases while Paramount Pictures Corp. and a few smaller studios have made their older catalogs available to Apple.

"As a long-term business matter, Apple has to get all the studios feeling good about the product and what they're doing with iTunes," Gartner Inc. analyst Mike McGuire said.

Movie executives, though, are worried about the here and now -- and how offering inexpensive movie downloads through Apple could hurt their sizable DVD businesses.

Apple already changed the way the music industry does business. For years, record labels were able to keep prices for albums on CDs at around $13 -- that is, until Apple persuaded label executives to let shoppers buy individual songs online for 99 cents as an alternative to downloading free, pirated tracks on file-sharing networks. Apple doesn't need to make much money selling music because it sells so many high-margin iPods -- more than 100 million to date.