Two Studios Join Disney to Sell New Releases on Apple’s iTunes

Implications: 1. Fox and Paramount “experiment” with new release sales on iTunes      2. Studios have hesitated to offer new releases for sale on iTunes due to pricing fears and the fear of Apple becoming al too powerful.

Analysis:  Fox is offering JUNO for purchase on the same day as DVD and Blu-ray release.  Paramount has begun testing iTunes download sales. Recently, Paramount’s BEOWOLF was offered for purchase shortly after DVD release and JACKASS 2.5 was made available one week before DVD release.  

Due to concerns about iTunes pricing and fears of iTunes power in the Music business other studios have hesitated to sell new releases through the Apple platform.  Until recently, Paramount only sold a limited library of older titles through iTunes.  

As predicted in an earlier posting “Apple Plans VOD Platform to Placate Studios” 9/7/2007, the resistance to iTunes is softening as the studios are gaining more control over their movie release windows and pricing.  In January, all the major studios agreed to license to the iTunes rental service during the video-on-demand release window.  The licensing terms of the Apple rental deals are comparable to the VOD revenue splits with the cable and IPTV players (if not somewhat better for the studios).  

Moreover, the studios are wrestling with growing electronic sell-through and electronic rental, without further weakening DVD sales. Fox, Paramount, Warner Bros, Universal and Sony have a variety of new and old releases for sale and rental on Amazon’s Unbox platform. However, one and a half year old Unbox does not appear to have added much to Amazon’s business as the service isn’t mentioned in last quarter’s earnings announcement.  

As for new releases, expect some further growth as Fox plans on offering more releases for sale on a title by title basis and Paramount will continue its experiment with iTunes on a down load to own basis during the DVD release windows as well.