“According to a June 19 article in Variety, Apple is in active negotiations with a number of major Hollywood studios to add movie downloads to its iTunes media store and begin offering the new service by year’s end,” Michael Greeson, CEO and Co-Founder of The Diffusion Group (TDG), writes in an opinion piece for TDG.
“As was the case with digital music, Apple’s would not be the first company to attempt an online movie download service. The space is already populated with the likes of CinemaNow and Movielink, with new entrants to likely include TiVo, Netflix, and even Amazon. Of course, this is only the beginning of the party and given the beauty of the Internet distribution model, TDG expects other entrants to step up (some very small, some very large),” Greeson writes. “It is important to note that the first-movers in the online movie rental/download space, CinemaNow and Movielink (both of which have been discussed numerous times in previous TDG Opinions) are having difficulties attracting a critical mass of users.”
Greeson asks, “So why would an iTunes movie download service work when other such services have tried (and failed) to gain a critical mass of users?”
“First, we’re talking about Apple not Movielink or CinemaNow. Apple has tremendous brand strength, an existing base of fanatical supporters who spend big bucks on comparatively overpriced (and arguably inferior) hardware tied to a proprietary service with unnecessarily restrictive usage parameters – these are ‘believers’ not just consumers,” ,” Greeson writes.
“Second, Apple has employed an incremental approach in the evolution of the iTunes service – from digital music to short films and TV programming – and at each stage has had a chance to evaluate what the ‘next step’ might look like. Adding movies to this mix is a logical enhancement to the existing service, one that will make sense to existing iTunes’ users,” Greeson writes.
“Third, whether this move is immediately successful may be beside the point. In reality, introducing an online movie download service is but part of Apple’s long term strategy to become a dominant media brand in the consumer living room,” Greeson writes.
Full article here.
[UPDATE: 9:29pm EDT: changed source and link to The Diffusion Group.]
“Apple has tremendous brand strength, an existing base of fanatical supporters who spend big bucks on comparatively overpriced (and arguably inferior) hardware tied to a proprietary service with unnecessarily restrictive usage parameters?” “Tremendous brand strength” is correct. “Fanatical supporters,” yes, in some cases, no, in others; and more for Macs than iPods anyway. But, to describe iPod+iTunes as “overpriced and arguably inferior hardware tied to a proprietary service with unnecessarily restrictive usage parameters” is just plain wrong.
Tellingly, Greeson offers no example of “superior” hardware that’s priced correctly in his opinion. Distill all of the reviews you’ve ever read of iPod and you won’t come up with “inferior hardware” anywhere in your list of common denominators. Instead you’ll have collection of raves about the quality of Apple iPod’s fit and finish. Anyone who actually knows how iPod+iTunes Store works, knows that Apple’s DRM is simply not “unnecessarily restrictive,” in fact, it’s really quite liberal DRM. And, even if you don’t agree with that statement, blame the music labels for “unnecessarily restrictive” DRM, not Apple. Apple’s DRM works on both Macs and Windows PCs, whereas the likes of Napster, MSN Music, MTV URGE and countless other also-rans are unnecessarily restricted to Windows-only which, if you read almost any independent review ever written, is inferior software — you can drop the “arguably” — to Apple’s Mac OS X.
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