Apple maps its assault on movie downloads

The eagerly anticipated MacWorld happened a few days ago and Steve Jobs delivered what Apple plan to do with its movie download business. Movie download services across the board has started to take off in the same way downloading music did with iTunes. Can iMovies emulate what iTunes did to the music industry?

During the 90's, Time Warner spent $10,000 a customer in Florida to show downloading movies over cable lines was technologically feasible. Now in 2008, as more companies jump on the band wagon, movie download services will be widely available from many sources, some legal and some unfortunately not so legal, but movie downloads are sure to part of everyday life before the end of this year experts predict.

Apple's plans at MacWorld will have undoubtedly shaken a few feathers, not because Apple is offering a fundamentally new twist on VOD but because it's Apple.

The movie download market today is very similar to where online music was in wake of the first Apple iPod. Back then, MP3 players were already on the market but were largely niche products and most music that played on them was illegal pirated copies. Apple created the first cool digital music player.

Steve Jobs was also the first technology executive with the heft in Hollywood to actually cut deals with studio executives to allow enough legal content online to create a marketplace and demonstrate that making money from digital music was at least possible.

In 2008, most consumers still aren't all that interested in cable companies' movie download offerings, largely because the studios are so worried about piracy and cannibalizing their existing TV syndication and DVD businesses that they haven't supplied enough product to interest subscribers.

Movie downloads from services like Vizumi , Netlflix and CinemaNow are still largely a curiosity for hobbyists and people who don't know how to download the pirated stuff or using file sharing sites such as Limewire.

Until now, Apple hasn't fared that much better and sold approximately 7 million movies compared to about 4 billion songs and 125 million TV shows.

Once again, Steve Jobs has persuaded the film studios to make vastly greater stores of content available to consumers in exchange for the tacit promise that he can create enough of a market to offset the inevitable increase in piracy that will occur when millions of new consumers realize how easy it is to download and share movies on their computers, iPods and TV sets. You only have to look at the movie piracy rate in Korea, which has the world's most ubiquitous broadband.

Apple's movie rental service could be exactly the spark Hollywood needs to jump start its online cinema business. Or the spark could become a conflagration that devours industry profits. Or it could flop once again, just as so many for-profit video-on-demand ventures have since Time Warner first dipped its toes in Orlando.

The only certainty is the movie downloads, legal or not, are here to stay.