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Apple's iTunes to sell movies on the day of their DVD release

May 02, 2008|Michelle Quinn and Dawn C. Chmielewski | Times Staff Writers

SAN FRANCISCO — Apple Inc. said Thursday that it would sell new releases from all the major movie studios through its iTunes online store on the same day as their DVD release.

Apple's agreements give iTunes a deeper slate of new releases, such as "Juno" and "I Am Legend." The company previously had offered the latest movies from Walt Disney Co. for sale and rent, along with older movies from a few studios. It also offered movies from the other major studios for rent -- but not until 30 days after the DVD release.

The deals also demonstrate Hollywood's growing comfort with Apple after years of worries that it would dominate distribution of digital movies as it does that of digital music.

"The movie industry no longer fears iTunes," Forrester Research analyst James McQuivey said.

The Cupertino, Calif., company will forgo some profit to reach the deals. The studios expect to reap about the same profit per download as they would for a movie sold on DVD, even though Apple will charge consumers less than the wholesale cost, according to people familiar with the agreement. It plans to make up the difference through sales of older movies and high-margin hardware such as the iPod.

Apple did not respond to requests for comment.

The company will sell new releases for $14.99 and most older titles for $9.99. ITunes customers can watch the movies on their computers and video iPods, and on television only if they plug their computers into the TV or own the Apple TV set-top box.

Apple entered the movie business in September 2006, offering new releases from Disney studios including Walt Disney Pictures, Pixar Animation, Miramax Films and Touchstone Pictures. But other studios balked at Apple's pricing for new releases, which in their view offered too little return to risk cannibalizing lucrative DVD sales or alienating powerful retailers.

Moreover, the studios worried about doing a deal that handed Apple Chief Executive Steve Jobs too much control over digital film distribution.

Evidence that the icy relationship had started to thaw came in January, when Jobs unveiled an online movie rental service that included films from each of the major studios. But Blockbuster Inc., Netflix Inc. and other DVD rental providers got a 30-day head start on new releases.

ITunes rentals still won't be available until 30 days after the DVD release.

Apple now sells movies -- on the same day as the DVD release -- from 20th Century Fox, Warner Bros., Paramount Pictures, Universal Studios Home Entertainment, Sony Pictures Entertainment, Lionsgate, Image Entertainment and First Look Studios.

"It's definitely a game changer to be up with the most influential leader in the digital space," said Craig Kornblau, president of Universal Studios Home Entertainment.

The online market for legally downloading movies has been slow to gain steam. Apple said in January that it had sold 7 million movies through iTunes. But in 2007, the average movie on iTunes sold 10,000 copies, a 23% drop from the previous year, said Brahm Eiley, president of Convergence Consulting Group, a Toronto-based market research firm.

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michelle.quinn@latimes.com

dawn.chmielewski @latimes.com

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