Product Type: Market Research Report
Published by: The Diffusion Group (TDG Research)
Published: August 2006
Product Code: R662-43Description While 2006 may be the year of online video, it certainly hasn’t been kind to online movie distributors. User-generated content has taken the web by storm, but ‘high-value’ content such as full-length post-theatrical movie releases and the online services that distribute them continue to languish.
It is within this environment that rumors surfaced regarding the possible launch of an Apple iTunes movie service. According to those in the know, Apple has been working on this project for more than a year but was awaiting the launch of the next-generation video iPod before coming out of the closet. These same sources stressed that the iTunes movie store and the new video iPod are inextricably connected and neither would be announced without the other. This seems consistent with Apple’s model to date - tie services to hardware and vice versa - a model that has proven devastatingly effective (just ask Apple’s competitors).
Industry perception of the viability of an iTunes’ movie download service varies from (1) those convinced it will languish just as Movielink and CinemaNow have done, to (2) those convinced it will do for online movie downloads precisely what it did for online digital music - make the market. The purpose of this paper is to evaluate the viability and appeal of an Apple iTune’s movie download service using both primary consumer research (TDG recently fielded a consumer study on just this subject) and critical analysis.
To evaluate how an Apple iTunes movie download service would be received by consumers, TDG commissioned a June 2006 study of more than 2,000 US households regarding their interest in and price sensitivity toward two types of Apple iTunes-branded online movie services - the first involving movie downloads to the PC and the second involving movie downloads to a iTunes-branded set-top box connected directly to the primary home TV. Researchers examined consumer receptivity to both of these scenarios across a variety of prices points, identified the core group of consumers most likely to adopt each of different these services, and profiled these segments across a number of characteristics.
The results of this extensive analysis are featured in a two-part report series entitled On the Viability of an iTunes Movie Service - Consumer & Strategic Perspectives. Part I contains a detailed examination of consumer receptivity towards an iTunes movie download service for the PC and portable devices. The report also features an overview and analysis of Movielink and CinemaNow, the two leading online movie distribution services, and a discussion regarding why these models have to date failed to capture a critical mass of users.
Part II of this series will feature a discussion and analysis of Apple’s iLife strategy and the role that new hardware platforms and iTunes will play in Apple’s entry into the home living room.
Please Note: Online delivery of this product is only available as a Global Site License (Access to report for any number of people internal to your organization via your local network or intranet sites, including access to report and supplemental features.)
Table of Contents
- 1.0 Introduction - Will iTunes Add Movie Downloads
- 2.0 Understanding the Landscape
- 2.1 Movielink
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- 2.1.1 Overview
- 2.1.2 The Money
- 2.1.3 The Model
- 2.1.4 The Evolution
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- 2.1.4.1 The Move from Rentals to Purchased Downloads
- 2.1.4.2 Introduction of Burn-to-DVD Features
- 2.1.4.3 Movielink in the Living Room? Akimbo, AT&T & Echostar
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2.1.5 Movielink’s Future
2.2 CinemaNow
- 2.2.1 Overview
2.2.2 The Money
2.2.3 The Model
2.2.4 The Evolution
- 2.2.4.1 The Move from Rentals to Purchased Downloads
2.2.4.2 Introduction of Burn-to-DVD Features
2.2.5 CinemaNow’s Future
2.3 New Entrants
2.4 Online Movie Download Services - Great Offering but Few Users
3.0 Rationale for Apple's Entry into this Market
4.0 Consumer Receptivity to a PC-Based iTunes's Movie Service
4.1 Background and Methodology of June 2006 Consumer Study
4.2 Interest in iTunes Movie Download Service
- 4.2.1 $10 per Title
4.2.2 $15 per Title
4.2.3 $20 per Title
4.2.4 $25 per Title
4.2.5 Interest and Power Ranking Comparison
4.3 Profiling iTunes Movie Service Intenders
- 4.3.1 CE Ownership
- 4.3.1.1 iPods
4.3.1.2 TVs
4.3.1.3 DVD Players
4.3.1.4 Game Consoles
4.3.1.5 DVRs
4.3.1.6 Home Theaters
4.3.1.7 Desktop PCs
4.3.1.8 Laptop PCs
4.3.2 Use of Value-Added TV Services
4.3.3 DVD Ownership & Purchasing Behavior
4.3.4 Movie Rental Habits
- 4.3.4.1 Rental Services Currently Used
4.3.4.2 Frequency of Usage
4.3.5 Technology Adopter Status
4.3.6 Demographics
- 4.3.6.1 Age
4.3.6.2 Marital Status
4.3.6.3 Hobbies
5.0 Reflections and Recommendations
Appendix A: 'Apple Profile' of Survey Sample
List of Figures
Figure 1 The Alternate Universe of On-Demand Video
Figure 2 Interest in Purchasing a Movie from iTunes at $10
Figure 3 Interest in Purchasing a Movie from iTunes at $15
Figure 4 Interest in Purchasing a Movie from iTunes at $20
Figure 5 Interest in Purchasing a Movie from iTunes at $25
Figure 6 Comparison of Purchase Interest Across Various Price Points
Figure 7 iPod Ownership by Intender Segment
Figure 8 Number of Televisions in the Household by Intender Segment
Figure 9 Number of SD Digital TVs in the Household by Intender Segment
Figure 10 Number of Analog TVs in the Household by Intender Segment
Figure 11 Number of Stand-Alone DVD Players in the Household by Intender segment
Figure 12 Number of Game Consoles in the Household by Intender Segment
Figure 13 Number of DVRs in the Household by Intender Segment
Figure 14 Home Theater Ownership by Intender Segment
Figure 15 Number of Desktop PCs in the Household by Intender Segment
Figure 16 Number of Laptop PCs by Intender Segment
Figure 17 Advanced Features/Services Used by Intender Segment
Figure 18 Number of DVDs in the Household by Intender Segment
Figure 19 Number of DVDs Purchased in the Last Six Months by Intender Segment
Figure 20 Primary Reason for Purchasing Movies by Intender Segment
Figure 21 Type(s) of Rental Services Used by Intender Segment
Figure 22 Number of Movies Rented per Month by Intender Segment
Figure 23 Technology Adopter Status by Intender Segment
Figure 24 Age of Respondent by Intender Segment
Figure 25 Marital Status by Intender Segment
Figure 26 Hobbies of Respondent by Intender Segment (1)
Figure 27 Hobbies of Respondent by Intender Segment (2)
Figure 28 Evaluating TAM vs. Take-Rate for PC-Based iTunes Movie Download Service
Figure 29 Ownership of iPods Among Broadband Households
Figure 30 Personal Usage of iPods Among Broadband Heads-of-Household (HoH)
Figure 31 Type of iPod Used Among Broadband HoH
Figure 32 Number of People in Broadband Households that Use iTunes
Figure 33 Experience with Downloading Video from iTunes
List of Tables
Table 1 Movielink's Rental & Sales Model
Table 2 CinemaNow’s Rental & Sales Model
Table 3 Percent Change in Purchase Interest Across Various Price Points
Table 4 Mean Number of Televisions by Intender Segment
Table 5 Mean Number of SD Digital TVs by Intender Segment
Table 6 Mean Number of Analog TVs by Intender Segment
Table 7 Mean Number of DVD Players by Intender Segment
Table 8 Mean Number of Game Consoles by Intender Segment
Table 9 Mean Number of DVRs by Intender Segment
Table10 Mean Number of Desktop PCs by Intender Segment
Table11 Mean Number of Laptop PCs by Intender Segment
Table12 Mean Number of DVDs Purchased in the Last Six Months by Intender Segment
Table13 Mean Number of Movies Rented per Month by Intender Segment
Table14 Mean Age of Respondent by Intender Segment
Table 15 iPod Ownership and Interest in iTunes Movie Service
Table 16 iTunes Video Usage and Interest in iTunes Movie Service
Table 17 Number of iTunes Video Users by Household and Interest in iTunes Movie Service
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