|
|
|
ONLINE FEATURES
Book Reviews
BW Video
Columnists
Interactive Gallery
Newsletters
Past Covers
Philanthropy
Podcasts
Special Reports
BLOGS
Auto Beat
Bangalore Tigers
Blogspotting
Brand New Day
Byte of the Apple
Economics Unbound
Eye on Asia
Fine On Media
Green Biz
Hot Property
Investing Insights
Management IQ
NEXT: Innovation
NussbaumOnDesign
Tech Beat
Working Parents
TECHNOLOGY
J.D. Power Ratings
Product Reviews
Tech Stats
Wildstrom: Tech Maven
AUTOS
Home Page
Auto Reviews
Classic Cars
Car Care & Safety
Hybrids
INNOVATION
& DESIGN Home Page Architecture Brand Equity Auto Design Game Room SMALLBIZ Smart Answers Success Stories Today's Tip INVESTING Investing: Europe Annual Reports BW 50 S&P Picks & Pans Stock Screeners Free S&P Stock Report SCOREBOARDS Hot Growth 100 Mutual Funds Info Tech 100 S&P 500 B-SCHOOLS Undergrad Programs MBA Blogs MBA Profiles MBA Rankings Who's Hiring Grads |  |
OCTOBER 24, 2005
Hollywood Holds Its Breath The iPod -- and Disney's blessing -- could create a mass audience for video on the go When Steve Jobs unveiled the much-anticipated video iPod in San Jose on Oct. 12, it was immediately clear that Apple Computer Inc.'s (AAPL ) latest gizmo will not transform movies the way the iPod and iTunes have revolutionized music. At least not right away. The new iPod, which has a bigger color screen and more capacity, plays short clips and TV series. And Apple has already started selling music videos and episodes of five Walt Disney Co. (DIS ) TV shows, including Desperate Housewives, for $1.99 through its iTunes Music Store. But there were no movie moguls on hand to help Jobs unveil an online store for full-length features. Selling movie downloads is a lot more complicated than selling singles and albums. Studio bosses continue to fret about piracy, and they are loath to give up a distribution model that allows them to release the same movie over and over in different formats. That's not to say Apple hasn't again stolen a march on its rivals. Along with the video iPod, the company unveiled a slimmer iMac with a remote control that allows people to use the new computer as a home entertainment appliance. And the Disney deal could lead other TV studios to offer content for $1.99. "Only Apple could have brought this together," says Van Baker, an analyst with Gartner Inc. Still, the day when movies will be downloaded to iPods likely remains far off. Disney chief Robert A. Iger appeared at the Apple event and mused about the potential for the Net to "distribute more content to more people, in more places, more often." But studios are terrified of the digital piracy rampant in music. Apple has had no success convincing them to adopt the Fairplay digital rights-management technology used in iTunes. Apple did agree, however, not to allow people who buy videos or TV shows to burn even a single CD or DVD. Besides, studios have more to lose than the music industry's top labels did when they cut their landmark deal with Jobs back in 2001. While Hollywood suffered through a funk this summer, the studios are in better shape than their music brethren, thanks largely to a decades-old distribution model that lets studios sell films many times over -- first via the box office, then as DVDs, and finally by selling the broadcast rights. As such, studios are balking at shuttering these release "windows" by letting Apple immediately release their latest hits. Even Disney won't make its TV shows available on iTunes until a day after they air. HURDLES AHEAD There are technical constraints, too. Using Apple's updated iTunes software, customers can download an hourlong TV show in 20 minutes. At that rate, a full-length movie would take half an hour. And analysts say it would consume half a gigabyte of storage space -- or five gigabytes-plus, if the movie was shot in a high-definition version. As a result, experts say online movies will remain a tiny niche until U.S. consumers get speedier broadband connections, slicker home networks, and beefier hard drives. "Broadband needs to connect to pretty display devices in the living room, not just to PCs," says Jim Ramo, CEO of movie download site Movielink. Jobs is well aware of the hurdles, which explains why the new iPod is a baby step to get a foothold without spooking the studios. But he may be betting that Hollywood will soon be ready to cut a deal. Disney's willingness to let Apple sell its TV shows is a sign that compromise may be in the air. And Iger has hinted that down the road, Disney may collapse the "windows" distribution model. "I think this is the start of something really big," Jobs said. "Sometimes the first step is the hardest one." Apple rivals, take note.  By Peter Burrows, with Cliff Edwards, in San Mateo, Calif., and with Ronald Grover in Los Angeles
BW MALL
SPONSORED LINKS
Get BusinessWeek directly on your desktop with our RSS feeds.
Buy a link now! Add BusinessWeek news to your Web site with our headline feed. Click to buy an e-print or reprint of a BusinessWeek or BusinessWeek Online story or video. To subscribe online to BusinessWeek magazine, please click here. Learn more, go to the BusinessWeekOnline home page  | | |
 Copyright 2005, by The McGraw-Hill Companies Inc. All rights reserved.Terms of Use | Privacy Notice |
Printer-Friendly Version