Silicon Valley Watcher - Former FT journalist Tom Foremski reporting from the intersection of technology and media

Apple movie store to launch mid-Sept.

Posted by Richard Koman - September 1, 2006


Apple will start selling feature-length movies on iTunes in mid-September, sources tell BusinessWeek. But only from one studio - Disney - where Steve Jobs just happens to be the largest shareholder after Disney's purchase of Pixar. Apple will charge $14.99 a flick, up from the $9.99 he wanted to charge. BW tackles the story from the Wal-Mart angle, though, and has Wal-Mart furiously pounding the studio corridors trying to stop Jobs from signing on any other studios.

With Wal-Mart CEO H. Lee Scott assigning his point man David Porter to roam the halls of major studios, skittish executives have for months delayed giving Jobs the rights to distribute their movies through his new service. ... News Corp.'s (NWS) Fox Entertainment Group may join in later, as might independent Lions Gate Entertainment (LGF), say Hollywood sources, but only if other studios come along, too. So far, other large studios have taken a pass, especially after Wal-Mart earlier this year threatened not to sell Disney's High School Musical for a time after Disney released it initially only on iTunes.

Wal-Mart, it seems, is planning its own movie download site. It wants marketing help from Hollywood for that site and it wants serious price cuts. Wal-Mart pays $17 a pop wholesale for DVDs. It wants prices slashed to $14. And Steve is getting pissed, too. He had a little meeting with Porter, in which he reminded him that Wal-Mart makes a ton of money selling iPods. Presumably they might find the wholesale price unexpectedly rising or supplies gettng thin. Few retailers are willing to play chicken with the boys from Arkansas. Is the video download biz that important to Apple? Probably yes, because Apple's game plan is to be the prime supplier of content, playback devices and software that puts the two together seamlessly. How many video iPods do they sell if Apple is just one of many movie sellers? Less.

But Wal-Mart is not Jobs' only competition. Amazon and Comcast are also forging deals with Hollywood for online video distribution. And don't forget about Netflix. Still, Apple had the hardware and no one else will have a solution that doesn't involve a) watching it on your laptop; b) copying it to DVD.

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