Media Wonk

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Apple playing catch-up - May 1, 2008

OK, as Media Wonk suspected, the "big" iTunes news this morning is not quite as big as some took it to be. Studio sources confirm that Apple has secured electronic sell-through rights from the major studios to new release movies at the same time appear on DVD--the same arrangement any number of other online retailers already have.

The new deals (for the most part) do not permit iTunes to start renting the movies (i.e. VOD) at the same time they appear on DVD. Those rights remain locked in the pay-per-view window, 30-45 days after the DVD release. One exception to that arrangement is Warner Bros., which announced yesterday that the majority of its new releases (although not all) will available via video-on-demand at the same time as their DVD release. But again, Apple is getting the same deal that other VOD providers get from Warner.

So, neither the surge in Apple's shares on the news, nor the punishing of Blockbuster and Netflix shares makes a whole lot of sense. Both Blockbuster and Netflix will continue to be able to offer consumers the option of renting movies for a low price a month or more before iTunes users will be able to do the same.

As for electronic sell-through, demand remains miniscule relative to DVD purchases, even with the recent slump in DVD sales. It's likely to remain that way so long as EST prices remain pegged to the DVD price, EST providers rely on various and incompatible DRM systems, movement between devices remains difficult and the ability to burn a purchased movie to a DVD-R remains limited.

Again, a necessary step for Apple, but if it were really that big a deal we'd be hearing about it from Steve Jobs.
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