Movie downloads on ITunes imminent

SAN JOSE, Calif.

Could the company that helped catapult the legal music-download market with IPods and ITunes now kick-start the online movie market?

Rumors of Apple Computer Inc.’s plans to start a movie-download service gained momentum Tuesday after the company sent invitations to the media saying “It’s Showtime” next week.

The media event, scheduled for next Tuesday in San Francisco, coincides with the opening day of the Apple Expo in Paris.

Sources at several Hollywood studios confirmed Tuesday that they were in talks to sell their films through ITunes. However, substantial disagreements between studios and Apple remain to be resolved, and Apple’s movie service could start with a limited number of films, according to two studio executives who asked to remain anonymous because talks were still ongoing.

Speculation about the IPod maker adding full-length feature films to its online ITunes Music Store have swirled for months. Already, the Cupertino, Calif.-based computer company has become a multimedia powerhouse with its song and TV-show downloads. Analysts said it would be just a matter of time before Apple started distributing movies online.

Apple chief executive Steve Jobs became a board member and the largest stockholder at the Walt Disney Co. earlier this year through Disney’s acquisition of Pixar Animation Studios Inc., which Mr. Jobs also headed. That connection provides a natural toehold for Disney to be among the first to sign a distribution deal.

Apple’s first experiment with a full-length TV movie on ITunes was in March, when it started offering the Disney Channel’s original TV movie, “High School Musical,” for $9.99.

Apple and Hollywood studio representatives refused to comment on speculation of a movie-licensing deal.

Analysts and industry observers expect Apple soon to introduce a new IPod player with a widescreen display — which would be better suited for viewing movies.

Several studios are balking at Apple’s demands, including selling all films for one price and making all films available for download the same day they are released on DVD, according to studio sources.

Studios already sell films through other online services, including Movielink, CinemaNow and Guba. Deals with those companies allow the studios to vary pricing and availability.

Studios also have some concerns about the digital protection offered by Apple. Other deals use Microsoft Corp.’s Windows Media software, which more tightly controls how many times films can be transferred to various devices.

Studios want to retain more control over their product, believing, as the mantra goes, that “content is king” and that Apple needs big studio fare to sell any new video player more than studios need to sell films through ITunes.

One studio executive said Tuesday that deals being struck for a similar download service planned by Amazon.com are more flexible and allow for higher profit margins.

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