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Apple Reveals New Internet Movie Service

Apple Computer Inc. unveiled a new service that will allow consumers to download movies onto an iPod or a computer just as they do with music from online stores. A media expert discusses the future of digital downloading and movie watching.

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    In recent days, two retail giants have announced new digital storefronts for consumers to download movies to computers and portable devices. Amazon's Unbox allows you to rent or buy films.

    And, yesterday, Apple unveiled a service that lets people download movies, just as they now do with music. The company also introduced a device coming in 2007 which will play those movies on a living room TV.

    What does all that mean?

    We get an explanation from Safa Rashtchy, managing director and senior research analyst at the investment bank Piper Jaffray.

    Why don't you start by explaining the big trend here behind these announcements? What's going on?

  • SAFA RASHTCHY, Managing Director/Senior Research Analyst, Piper Jaffray:

    Well, we are almost at an inflection point of several trends that are helping push these initiatives.

    And it's been happening rather quickly. If you look back over the past few months, certainly, this year, we would — you would see probably about 90 percent of the announcements regarding movie downloads that have happened very recently.

    So, what's happening is that, for the first time, we have crossed over the 50 percent broadband penetration. In other words, the majority of the U.S. households now use some sort of a broadband connection, which means downloading video, which takes a lot of time, is faster now.

    And, at the same time, over the past several years, especially with Internet growing, younger people in particular have been paying less attention to traditional forms, like TV or even going out to — to see movies. So, all of these things have compelled the content creators and studios to look for new ways of distribution, being online especially.

    And, within this environment, distributors like Google, Amazon, and, of course, Apple see a major opportunity. So, that's really pushing this trend towards movie downloads.

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