Apple v. Amazon, it's Disney vs. the rest

[Pluto Region1]

With this forum community so oriented towards the DVD "total package," I imagine there's not much enthusiasm for buying movies online. I certainly have no intention of buying movies online, because I like having a tangible collection, something I can hold in my hands. However, it looks like the industry is betting there's big money to be made in this platform.

http://arstechnica.com/news.ars/post/20060906-7677.html

In Apple v. Amazon, it's Disney versus the rest

9/6/2006 12:17:22 PM, by Ken Fisher

Amazon and Apple are poised to launch their online movie stores in the coming weeks, and everyone knows it. Apple's big event is on Tuesday next, while Amazon has yet to tip its hat on a launch date (though we've seen the screenshots). It's not a question of if... only a question of when. In fact, the number of people talking about these developments behind the scenes is so great at even the Wall Street Journal is reporting the "rumors" as facts.

One of the more interesting tidbits coming from folks in the know is an apparent split between Disney and the other major studios over who they want to do business with. At present, Apple has managed to only sign Disney, while Amazon has scored deals with most of the major studios... except Disney. As you may know, Steve Jobs and Disney got a lot closer earlier this year when Disney bought Pixar for more than $7 billion, and Jobs got a seat on the board. What's the hubbub?

Amazon and Apple are taking different approaches to pricing, with Apple desiring to keep pricing locked into two or three tiers. For instance, older movies are expected to cost $9.99 from Apple, with newer releases selling for $14.99. Apple wants to keep pricing at these two poles, with perhaps a third reserved for special editions, video sets, and the like. Amazon's service is reportedly open-ended, leaving the studios to adjust prices at will and set them wherever they please.

What no one can answer is why Disney hasn't signed with Amazon. While Apple may be experiencing problems getting everyone into a streamlined pricing model, the open-ended nature of Amazon's offering means that Disney can still sell at whatever price point it wants. In fact, to make matters even more confusing, the WSJ paraphrases an anonymous studio executive as saying that he expects most movies on Amazon to sell between $9.99 and $14.99—the outlying price points used by Apple. If Disney can sell for whatever price they want, what's the reason for the holdout?

Apple probably isn't worried, regardless. When the iTunes Music Store added television shows last year, Disney was the only major player on board, and we all know what happened after that. Slowly but surely, the other studios and networks came into the fold, and Apple has now reportedly moved more than 35 million videos. "If you build it, they will come..."

Success isn't a given, however. The all-important early-adopter market could balk at movie prices that aren't much below that of DVD. While new DVD releases can easily climb over $20, a little legwork can turn up DVD deals in the $10-18 range. Those same DVDs also sport higher quality video than current mobile offerings, and of course, they actually play into today's DVD players.

The higher-end of the pricing scale is where the real dispute is taking place. In short, Apple wants studios to commit to $14.99 for new releases, and the studios want the option of selling higher. Let's face it: Apple's battles with the music industry have probably led the video guys to worry about the golden lining of new hit releases. What if this takes off? What if they want to sell at $17.99? From the point of view of the studios, online movie distribution is a threat to their DVD revenues, and you can bet that they're reticent to turn their pricing over to Apple. With Apple reportedly willing to hand over $14.50 of each $14.99 sale to the studios, the lack of interest from the major studios right now suggests that they are accustomed to better margins, even after accounting for product costs and packaging.

Problem is, if history is anything to go by, the iTunes Music Store may be the only place to make money online for the foreseeable future.

[2099net]

If you're talking about 240x180 ipod sized movies, then no. I have a Zen, and I can make Zen compatible sized movies from my DVD discs.

In my opinion anyone is mad to pay over $3 (approx half the price of a movie ticket) to own a small sized movie. That's why the UMD failed. You don't pay over half the price of a DVD for a movie a quarter of the size.

Its not clear from the text what size the movies will be, but given it mentions iPods videos as being similar, I assume they are small screen size.

[BrandonH]

I like watching movies on the television screen much more than on the computer. If they ever came up with a way to QUICKLY transfer the movie data from a computer to a TV, then I would consider buying movies online, but I doubt that will happen anytime soon.

[goofystitch]

The rumors for the future of iPod that I've heard talk about a new screen format. The new iPod's are supposedly going to be designed as a touch screen and the entire front of the device will be the screen. It's supposed to be 16x9 and higher resolution. It'll have a digital click wheel to scrool through everything on the player, but that movies will be stretched or released in 16x9 format on iTunes. Theses changes are reportedly going to take place within the next 2 waves of iPod releases. So if the iPod is going to be capable of higer resolution, wouldn't that mean that these movies would be released in better quality. Granted, it's not as good of quality as you would get on a DVD, but I buy TV show episodes on iTunes. And as I just did with Lost, I usually end up buying the DVD set when it was released. I don't buy entire seasons on iTunes. Only episodes I missed and don't want to wait to catch up on. Anyways, what I'm trying to say is that I will always prefer a DVD or blue ray or HDDVD or whatever else comes in the future in opposition to just a hard drive full of videos, but it's nice to have this option. I currently have a program that converts DVD's to MPEG-4, which is what iPods play, so I have all of my favorite Disney films on my iPod already, but I would considder buying films not on DVD or that I didn't buy on DVD and wouldn't watch enough to pay $20, but wouldn't mind $9.99.

[Pluto Region1]

If you're talking about 240x180 ipod sized movies, then no. I have a Zen, and I can make Zen compatible sized movies from my DVD discs.

In my opinion anyone is mad to pay over $3 (approx half the price of a movie ticket) to own a small sized movie.

I guess the aspect of this is the portability of the movie? If you are on the go or on the plane, this is the only reason I can see why someone would download a movie. Now, say I was traveling, I could just bring my DVDs with me and play them on my laptop, but I would not be able to get the DVD to play on my Ipod, because it is a different format.

But now I don't think you can bring an Ipod OR laptop on a plane, correct? So I am thinking, what is the real usefulness of buying a movie that you only will have in an electronic form like this? Then downloading all these movies, wouldn't you create a hard drive storage issue for yourself? Will these movies be able to be taken off the computer and transferred to DVD and played on a home DVD player so you can watch on your TV? (I guess this gets back to what Nettie is saying - the format is very compressed and likely small so it can be portable and this would not be compatible for playing on a normal 25-inch and up TV monitor).

On the other hand, I can't imagine these companies going into this market if they didn't see a real "market" for this product....

[hopesethigh]

I really hope that none of the Disney animated classics are put to this kind of humiliation.

The only way I personally approve of this decision (if anyone really cares, HAHA) is if the movies available to download online are not any of the animated classics or any movies Walt Disney himself put that special touch on. For example, the direct to video Disney movies and the new-er live action movies (ie, The Rookie, The Haunted Mansion, Stitch! The Movie etc.)

With the development of Blu-Ray and a remaining major market for DVD, isn't Disney really spreading themself thin considering there really hasn't been the same amount of huge blockbusters in recent years, compared to the Disney revival period (Little Mermaid, Beauty and the Beast, etc.)? I would rather see Disney spend as much time as possible perfecting Blu-Ray and DVD technology then wasting their time with this online fad.