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iTunes to start movie downloads later this month

TechCrunch reports that iTunes will have a movie download service up and running later this month:

Rumors have been swirling for weeks (see here and here) that Apple will soon be selling full length movie downloads on the iTunes service. This morning, Business Week is stating, based on unnamed sources, that the service will launch by mid-September.

And adding color to the story: WalMart is pissed off.

Apple is pushing for, and apparently getting, $14 wholesale movie prices on new releases. They plan to retail new releases for $14.99 and older movies for $9.99. Normal wholesale DVD prices are $17. Walmart pays that normal wholesale rate, and now anticipates losing a significant share of their 40% market share in the $17 billion annual DVD market. Given that it will be trivial for iTunes users to simply burn a DVD of these movie downloads, Walmart has good reason to be worried. Netflix should be nervous, too.

Look for the initial announcement to only include movies from Walt Disney (Appleโ€™s Steve Jobs is Disneyโ€™s largest shareholder), and possibly Fox and Lions Gate.

It will be interesting to see how this takes off. On the one hand movies are different from music and I can’t see it duplicating the success Apple has had with music downloads, at least in the short term. But as devices get better and more people get used to downloading films, it seems like the natural thing for Apple to do.

The quality of the first videos may not be great and Apple will almost certainly be getting the biggest slice of the revenues but if movie studios want to combat piracy and flagging DVD sales embracing legal download services is a must.

It obviously won’t replace Netflix or the established DVD retail market but there are clearly people who do want to download films in the same way they do music. The Business Week story that TechCrunch quotes shows the problems different retailers and studios have with issues like pricing, but it is important that the trend is now starting.

> The original story at Techcrunch
> Business Week on the looming battle between Apple and Wal-Mart over movie downloads
> Wikipedia entry for the iTunes Music Store
> Engadget on the Lionsgate CEO who confirmed they will be offering movie downloads