Apple Starts Selling MGM Films on ITunes

By | April 11, 2007 at 5:47 PM

Apple Inc. added Metro-Goldwyn- Mayer Inc. movies for sale on the iTunes Web site, offering customers such classic titles as “The Great Train Robbery” and modern hits like “Rocky.” MGM, owner of the world’s largest film library, will sell about 100 of its movies on iTunes, Derick Mains, a spokesman for Cupertino, California-based Apple said today in an interview. Films from MGM, the fourth studio to sign on since Apple started the movie-download service eight months ago, boost the iTunes catalog to more than 500 films, Apple said in a statement. Except for Walt Disney Co., where Apple Chief Executive Officer Steve Jobs is a director, major distributors have resisted making their films available. “The studios are taking their time deciding if they want to put movies on iTunes,” said Michael Pachter, a Los Angeles- based video-game and online analyst at Wedbush Morgan Securities. “They want to understand how a release into the portable market will impact DVD sales, theatrical and pay TV.” MGM will be offering films from its library and not new releases, Mains said. Titles will sell for $9.99 each, he said. Apple said they will be “near-DVD” quality. Shares of Apple, maker of the iPod music player and Macintosh computers, declined $1.66 to $92.59 at 4 p.m. New York time in Nasdaq Stock Market trading. Los Angeles-based MGM is owned by a group including Providence Equity Partners, TPG, Sony Corp. and Comcast Corp. Adding Films The addition of MGM advances an effort by Jobs, who sold his Pixar film studio to Disney last year for $8.06 billion, to win broad adoption of Apple products such as the iPod, which plays films and TV shows, and the Apple TV set-top box. Since September, customers have downloaded more than 2 million movies through iTunes, Apple said. Burbank, California- based Disney is making its films available as fast as possible and had more than 100 on iTunes at the end of 2006, Disney studios chief Dick Cook said on Dec. 30. Lions Gate Entertainment Corp. said in February it would put 160 movies, including “Terminator 2,” on iTunes. Viacom Inc.’s Paramount began selling movies in January, including “Breakfast at Tiffany’s,” with a goal of reaching 200 by year- end. Apple has sold 2.5 billion song downloads for the iPod player, which can also play films and TV shows. Competitors While iTunes has more than 500 titles, Blockbuster Inc. has 65,000 online rental films and NetFlix Inc. offers 70,000, according to company regulatory filings. Hollywood studios such as Time Warner Inc.’s Warner Bros., News Corp.’s Twentieth Century Fox and Sony Corp. haven’t yet agreed to make their films available. “They don’t want to put a movie out there and have it pirated by the millions in China,” said Pachter, who doesn’t rate shares of Apple or any of the movie studios. Traditional retailers such as Wal-Mart Stores Inc. and Target Corp. have lobbied studios against making films available on iTunes and other Internet movie services because of concern that online film downloads, which cost less, could undercut DVD sales in their stores. MGM’s executive vice president of worldwide digital media, Douglas A. Lee, declined to say whether the biggest franchises in the studio’s 5,000-film library, the “Pink Panther” and “James Bond” movies, will be included. MGM will offer the same titles on iTunes to an Internet movie service started by Bentonville, Arkansas-based Wal-Mart, the world’s largest retailer, and another being developed by Best Buy Co. The studio’s films are already online at Inc., MovieLink LLC and CinemaNow Inc. “We’re placing our bets with a lot of platforms,” Lee said in an interview. “We don’t know which ones will succeed right now, so we’re trying to put our product on as many venues as possible.”

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