honoluluadvertiser.com

Sponsored by:

Comment, blog & share photos

Log in | Become a member
The Honolulu Advertiser
Posted on: Friday, September 8, 2006

Amazon video download beats Apple to market

By Byron Acohido
USA Today

The front screen from Amazon.com's new video download Web site, www.unbox.com, is shown shortly after it went live. The Internet retailer launched the digital downloading service yesterday.

Associated Press

spacer spacer

SEATTLE — Internet giant Amazon yesterday threw down a gauntlet at Apple by launching Amazon Unbox, its long-anticipated movie-download service.

Apple has scheduled a news conference for Tuesday at which it is widely expected to answer by expanding its popular iTunes digital store to include a similar service.

Paid movie downloads have been available for years. Whether either tech titan can break consumers' preference for renting or buying DVD movies remains to be seen. "Our goal is to offer consumers great choice," says Bill Carr, Amazon's vice president of digital media. Amazon's 59 million active customers can now order DVD movies shipped to their door or "choose unboxed movies and download directly to their PC," he says.

Amazon will pitch Unbox on its popular IMDb movie trivia Web site. It will make available TV programs and movies from 30 Hollywood studios. Movie rentals will run $3 to $4, purchases $8 to $15. TV programs will run $2 per episode. "It's a natural way to keep loyal customers coming back," says retail industry analyst Dan Geiman of McAdams Wright Ragen.

However, customers must play the movie on a Windows PC or on one of a handful of Windows Media-compatible portable players, which have not caught on as hot sellers. Notably, the downloaded movies cannot be burned onto blank DVDs for playback on generic DVD players, used in home entertainment systems, or on portable DVD players popular with air travelers. Nor will the content be playable on Apple's iconic iPod portable digital player.

"It's a PC-only experience," says JupiterResearch analyst Michael Gartenberg. "There's no way to burn content to a DVD for playback. Without a really interesting device to use this with besides the PC, it's going to be a challenge for them."

Apple has said it will make a major announcement Tuesday about its iTunes store, which dominates paid music downloads for the iPod and already offers paid downloads of popular TV programs. Adding movies would meet a pent-up demand from loyal iPod users, says Gene Munster, an analyst at Piper Jaffray.

Apple could trump Amazon's alliance with Microsoft if it allows consumers to burn movies downloaded via its iTunes store onto blank DVDs, Munster says. Consumers could play back the content on their iPod, or, by making a DVD copy, virtually anywhere else.

"This could be the biggest event in consumer media since Napster," Munster says. "Burning is critical. Burning opens up the market."

Apple declined to comment on its plans.

Benjamin Feingold, president for digital distribution at Sony Pictures Home Entertainment, says movie studios view downloads as a promising new way to reach consumers with archived content.

"We're planting seeds to have our products distributed into the home," Feingold says.