Apple Computer announced last night it will sell movie downloads from Walt Disney Co.'s film studios, at a time when its iTunes online music service faces increased competition from its rivals.
Apple Computer CEO Steve Jobs with a clip from the movie,
Chief Executive Steve Jobs also said Apple planned to ship a device in the first quarter of 2007 to let consumers stream movies, music, photos, podcasts and television shows from the Web to their home entertainment systems.
Code-named iTV, the device will cost $299 and analysts said it could solve the entertainment industry's dilemma of bridging the gap between the living room television and the computer.
"He has fundamentally closed the loop and Apple has a complete solution," said Tim Bajarin, an analyst at Creative Strategies, of Jobs. "This is a big winner for Apple."
Jobs said the combination of iTV, its Macintosh computer, the iPod and other Apple products will put Apple squarely in homes, cars and consumer pockets as it looks to stamp its mark on all aspects of the digital lifestyle.
"I hope this gives you a little bit of an idea of where we are going," Jobs said at an event in San Francisco, where he also unveiled new versions of the popular iPod media player.
Apple's eagerly anticipated movie service will sell new releases from the Disney, Pixar, Touchstone and Miramax studios for $12.99 if pre-ordered or bought during the first week available. Normally, new releases will cost $14.99 and other feature-length films will cost $9.99.
Jobs said about 75 films are now available on iTunes, and that they take about 30 minutes each to download for users with high-speed Internet connections. Consumers can view the movies on their iPods and computers, and eventually on televisions with the upcoming iTV player.
"In less than one year we've grown from offering just five TV shows to offering over 220 TV shows, and we hope to do the same with movies," Jobs said. "iTunes is selling over 1 million videos a week, and we hope to match that with movies in less than a year."
Jobs, a Disney director and one of the company's largest individual shareholders, also introduced new versions of the iPod with brighter screens and longer battery life as Apple looks to expand its dominant position in digital music.
Analysts have said it was only a matter of time before Apple started selling full-length movie downloads via iTunes, which has already sold 1.5 billion songs and more than 45 million TV shows.
Apple's push into movie downloads come at a time when the company is facing a growing contingent of competitors in the digital music market, including Microsoft, which plans to launch its Zune digital media player later this year.
There are already competitors in the nascent movie download market, including CinemaNow, Movielink and Amazon.
Apple shares ended up 13 cents at $72.63 on Nasdaq.