By MAY WONG
The Associated Press
Tuesday, September 12, 2006; 10:07 PM
SAN FRANCISCO -- Seeking to further push digital media into homes, Apple Computer launched its long-awaited online movie service Tuesday and showed off a device that will make it easier for consumers to watch the videos on television.
The iTunes Music Store, however, will initially carry movies only from the studios of The Walt Disney Co., where Apple CEO Steve Jobs is a board member. By contrast, Amazon.com Inc.'s movie service launched last week with distribution deals with seven studios _ but not Disney.
Jobs said more than 75 films will be available on iTunes from Walt Disney Pictures, Pixar, Touchstone Pictures and Miramax. New releases will be priced at $12.99, when pre-ordered and during the first week of sale, or $14.99 afterward. Library titles will be sold for $9.99 each.
Other online movie services already exist but haven't attracted many customers. Apple, however, is already being cast as a leading competitor with its entry.
Several sources at Hollywood studios said disagreements over pricing and other issues remain unresolved, but some analysts expect it'll only be a matter of time before more distribution deals are inked.
Part of the reason is the credibility that Apple has gained already with its online music and TV show offerings: more than 45 million TV programs have been downloaded since they first became available on iTunes less than a year ago, and more than 1.5 billion songs have been purchased from the online store.
Another reason is Apple's strategy of bringing digital content stored on a computer and playing it back on a television _ a challenge that has so far dogged online video providers and other companies looking to expand digital multimedia into the mainstream market.
As many expected, Apple is tackling that problem.
At a media event Tuesday, Jobs also showed off a slim, compact set-top box, dubbed iTV, that will allow consumers to wirelessly send movies purchased online _ as well as other digital content stored on a computer _ to a television set. It will sell for $299 and be available early next year.
With iTV, digital content stored on computers could more easily be played on TVs, Jobs said.
"We think it completes the picture here. Now I could download content from iTunes. I could enjoy it on my computer, my iPod and my big-screen television in the living room," he said.
The device, which looks like a much flatter but slightly wider version of the Mac mini computer, will work with Windows-based or Mac computers that use the iTunes software to manage multimedia files. Apple's senior vice president of worldwide marketing Phil Schiller said the product is designed to work best with flat-panel televisions formatted for widescreen viewing. He refused to elaborate on other product details, such as what strain of wireless technology will be used to address potential video delivery-hiccup problems.
Similar media appliances that are designed to link a PC to a television already exist, but none have gained much traction, analysts say.
As a result, relatively few PCs these days are hooked up to television sets. And though others, such as cable providers and startups like Akimbo Systems Inc., have introduced set-top-boxes and services to deliver on-demand videos and TV shows through a broadband Internet connection, full-length feature films from major Hollywood studios either aren't on their libraries, or are only available on a rental basis.
So-called media center computers, such as ones from Dell Inc. or Hewlett-Packard Co., are designed to play and record TV shows. But many still look like they belong under a desk in an office instead of on an entertainment rack in the living room.
"With Apple's superior design of integrating its hardware and software, Apple will still be the one to watch," said Forrester Research analyst Josh Bernoff. "But I think you'll see this market develop in a more fragmented way than the way Apple came to dominate the music market."
Resistance from the movie studios to heed all of Apple's demands and their willingness to work with other movie download providers shows that Apple doesn't hold as much leverage with that industry as it did with music labels when iTunes jumpstarted the legal music download market back in 2003, analysts say.
Still, Apple remained confident about its perch in digital movies and other media _ catapulted by the iPod-iTunes juggernaut.
Apple's lineup of content, hardware and software "is going to make digital media a success and will lead to a breakthrough in the industry," Schiller said.
It's all part of Apple's goal to make its products the digital media hub for consumers. Its iconic iPod player is designed for music and video on-the-go, its iTunes Music Store is a leading destination for getting digital content, and its Macintosh computers are touted for being able to manage all media.
Jobs also announced a slate of iPods upgrades, including:
_ A 24-hour battery life on a thinner, aluminum-cased iPod Nano, which stores media files on flash memory chips. Models, ranging in capacity from 2 gigabytes to 8 gigabytes will come in five colors and sell for between $149 and $249.
_ A larger-capacity video-capable iPod that features an 80-gigabyte hard drive for storing digital music, video and other content. It will retail for $349
_ A smaller-sized iPod Shuffle, which also will sport a built-in clip. It will sell for $79.
The Nano and larger-capacity iPods are available immediately. The shuffle will be available in October.
Jobs also debuted downloadable video games such as "Tetris" or "Bejeweled," that have been designed for the latest video-iPod models. They can be purchased at the iTunes online store for $4.99 apiece.
Shares of Apple Computer Inc. gained 56 cents, at $73.06 in afternoon trading on the Nasdaq Stock Market.