Movie Store Will Sell New Releases for $12.99 and Beam Them to Your TV Next Year

Apple serenaded the Mac faithful today with a symphony of iPod and iTunes announcements that were geared square at the movie-watcher, including a price break and modest improvements to the iPod hardware, a bump in the quality of downloadable content, and a new online storefront that will sell downloads from Disney-owned studios for $9.99 to $14.99.
iTunes won’t let you burn your movie library to DVD – but Apple addressed that issue in elegant (and potentially expensive) fashion by promising a Q1 2007 launch for a $299 wireless set-top box purpose-built to stream content from the Mac in your den to that fancy-pants TV in your living room. The new videos max out at 640×480 (Apple says the second number will be lower for widescreen movies, but why can’t they just encode those anamorphically, a la DVD titles, to make use of the full vertical resolution?), but there’s no reason why the quality should stop there. If the products take off, expect to see actual HD resolutions become an option in the future.

What’s really clever about this scenario is the way Apple has leveraged studio anti-copy concerns into an opportunity to make lots of money selling a new piece of gear. This wireless box will make it unnecessary for consumers to use physical media to get the content into their living rooms – and therefore closes the potential piracy loophole that physical media opens. (Linux adherents are likely still out of luck.) Assuming Disney is providing its A-list content (Cars, Pirates of the Caribbean 2) day-and-date with the DVD release, consumers look to get a fair price on the product as well ($12.99 for sales through a film’s first week of availability and $14.99 thereafter, with catalog titles priced at $9.99).

What’s not to like? Well, $299 is a lot of money for a product if mainstream consumers can’t immediately grok what it’s good for – so Apple will need to promote this with a strategy that simultaneously educates them and markets to them. Bringing content into the living room is crucial to Apple’s Hollywood strategy in part because studies continue to show that consumers are reluctant to watch longform video on their computers. Also, studio heads can be stubborn people. Who knows what it will take to convince other content owners to follow Disney’s lead, if that’s even possible.

(There are probably scores of independent filmmakers who’d love to offer their own projects for sale through iTunes, assuming they get a fair kickback from each sale – but for the time being, it looks like the iTunes Store will be a marketplace for mainstream movies only.)

So if Apple can convince other studios to join up – and can keep the service price-competitive with the $5.88 DVD bin at your local Wal-Mart – it’s easy to imagine iTunes carving out a significant niche as the hip video store for tech-savvy movie buffs with an instant-gratification complex.

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