Apple Announces Feature-length Downloads for iTunes

iTunes movie downloads
In a special presentation yesterday, Apple CEO Steve Jobs unveiled the new iTunes movie store, which will enable users to buy and download feature-length films.

The initial slate of 100 movies includes an offering of titles from Disney-affiliated labels Pixar, Miramax, Touchstone, as well as Disney-branded films. A forthcoming deal with Lionsgate is expected, but was not announced during the presentation. The films will be priced at $14.99 for new releases and $9.99 for catalog titles, but customers who pre-order new releases can order them for $12.99. The video files will use the H.264 codec and will be at 640 x 480 resolution, which is “near DVD” quality and suitable for viewing on standard TV sets.

Apple also gave a sneak preview of a new product tentatively called “iTV,” which is a set-top box that will enable users to stream downloaded movies, music, and photos from a computer to a consumer’s television set. The wireless box will also have HDMI output, which should be able to address the studio’s piracy concerns. The iTV release date is slated for sometime in 1Q 2007.

When compared to the lackluster release of Amazon’s Unbox service last week, the Apple offering looks like an improvement if they can secure a wider base of content partners. However, the pricing structure for DRM-hobbled, low-quality video without packaging or special features seems too high. For example, for $20 dollars, you can pick up Miramax’s ‘Kinky Boots’ DVD on Amazon, and for that price you will get DVD quality video, Dolby 5.1 sound, two featurettes, deleted scenes, commentaries, and foreign language tracks. You can play it on any DVD player in or out of the home, and if you wanted to, an individual with minimal technical knowledge can rip a DRM-free version to play on their iPod (albeit illegally). Therein lies the real problem: creating a downloadable product that offers consumers the same level of choice for the same price as a physical product, or reducing the price to reflect the true value to the consumer.

Perhaps the recent conjecture is right - maybe the studios aren't interested in seeing downloads cannibalize DVD sales just yet.

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