Apple Gets Earlier Access to Movies

All you need to know about where money gets made in the movie business are the three letters "DVD."

Studios make 14 percent or less from theatrical showings and about half their revenue from DVD rentals and sales. Less than 10 percent is earned from all cable, satellite and telco payments, including content shown as premium channels such as HBO and video on demand.

DVD is where the money is, and studios aren't going to make any really significant changes they think will damage those revenues. So they must have concluded that "the times they are a changing."

After years of negotiating with the movie studios, Apple finally has gotten the major studios to allow rental of iTunes movies on the same day they release new DVDs. That's a big change, and suggests studios now have evidence that they will make no less money, and possibly more, if they do so.

Disney has had that arrangement with Apple since September 2006. Now Apple will be able to distribute movies from 20th Century Fox, Warner Bros. , Paramount Pictures, Universal Studios Home Entertainment, Sony Pictures Entertainment, Lionsgate, Image Entertainment and First Look Studios.

New movies can now be purchased for $15 or rented for $4. Older movies cost $10 to buy or $3 to rent.

For any number of practical reasons, such as the fact that hard drives always die, it is likely iTunes will get more revenue traction from rentals than from sales. Up to this point Apple movie sales have been pretty low, volume-wise.

Rentals are not only are cheaper, but are congruent. Most movies are not compelling enough to watch more than once, and owning makes most sense for movies one thinks one is going to watch several times or more.

So the issue everyone now will be watching is how revenue shares move around within the movie ecosystem. Studios wouldn't be taking this move unless they think they'll make more money from downloads and streaming than from selling discs.

Sure, downloads probably will negatively affect DVD rentals and sales. But the profit margins on downloads are much higher than for DVD sales or rentals. So if all downloads do is cannibalize DVD sales and rentals, the studios win.

Free Wi-Fi for All AT&T Wireless Customers?

AT&T hotspots have started providing iPhone users with free Wi-Fi access at Starbucks and other locations. AT&T Broadband customers also have free access. One wonders how long it will be before all AT&T Wireless customers will get access. AT&T has talked about that.

That's one advantage of customer and network scale. AT&T doesn't necessarily have to make much actual incremental revenue from the Wi-Fi service. What it does is make its wired and wireless service much more sticky.

And given its scale--100 million customers--AT&T is in position to create other "everybody is on network" services of various types, the same way Skype creates "free calling to all other Skype users."

The difference is that AT&T can mix and match services and features available on its in-region wired, national wireless and global network, including mobile and fixed broadband, mobile and fixed calling, messaging or other services with a "social" or "community" aspect.

Scale has many advantages.

T-Mobile Lighting 3G: Voice Only

T Mobile is lighting its 3G network in New York in voice-only mode, says Gizmodo. Don't ask me why. I cannot figure this out. Maybe the backhaul issues are serious enough that broadband really isn't available yet. If so, don't bother offering commercial service.

The voice network and EDGE data network already work. What conceivable value does a T-Mobile customer get from 3G speeds if all you can do is what you already are doing? Sure, it's just the first city of a national network.

But why not offer some new service that the network actually enables?

Mobile Sites Significantly Lift Site Usage

TotalWeb, the new company created by Nielsen Online, says mobile Web sites provide a significant increase in usage. Weather-based sites, for example, see an average 22 percent lift in usage, compared to sites that are designed for PC access alone.

So do entertainment sites, which get 22 percent more use when sites are rendered for mobile screens.

Game and music sites get 15 percent lift when authored for mobile use.

Nielsen says 87 million U.S. mobile users subscribe to mobile Internet services, and more than one in ten mobile subscribers (13.7 percent) actively uses mobile Internet each month.

iPhone Sales to Double?

Apple is going to sell lots more phones (no surprise there) if AT&T does subsidize the new 3G iPhones, says Bernstein Research analyst Toni Sacconaghi, reported by Eric Savitz, Barrons columnist.

If AT&T does provide a $200 subsidy for the3G iPhone, bringing the phone’s cost for consumers down to about $200, where current models are priced at $399 and $499, sales might double, based on past precedent.

Sacconaghi notes that that sales of the Motorola RAZR doubled when its price dropped from $500 to $150 and doubled again when the price went to $100.

If AT&T average revenue per subscriber from the iPhone is in the mid-$90 a month range, compared to less than $60 for the average post-paid user, then AT&T has an additional $720 in revenue over the course of a two-year plan to offset the subsidy.

AT&T Launching Mobile TV

AT&T is launching its own mobile TV service, which should provide more pointers for Dish Network, also expected to launch its own service in the future.

AT&T's service requires specific device models costing between $200-$300, a TV-only data plan costing $15 a month (or $30 if a user also wantsWeb browsing). One device not supported is the Apple iPhone, which for many is reason enough not to bother.

It is doubtful AT&T expects much immediate success. Verizon does not seem to have seen healthy uptake for its Vcast service so far.

Qualcomm, which provides the technology to support the Verizon service, says only that so far the service has been a disappointment. Silicon Alley writer Michael Learmonth suggests that
perhaps 1.5 percent, or 820,000 Verizon subscribers, have ever watched TV on their phones.

In Europe, where several operators offer mobile TV, fewer than one percent subscribe.

Analysts at the Yankee Group say five percent of mobile subscribers are actually willing to pay for mobile TV, if the monthly price is $5.

As has been the case for other mobile services, sluggish uptake now does not mean the service never will be significant. Mobile service itself and texting took quite some time to become firmly embedded as a part of consumer behavior, at least in the U.S. market.

Still, some question whether there is much appetite for a limited selection of long-form TV shows in the mobile space. The issue there is whether the preferred delivery mode might not ultimately be some on-demand delivery. Content breadth is more important to users than lots of other attributes.

Right now, that thesis can't be tested as the programming selection is so limited. Only when the variety of programming is about as rich as any typical cable, satellite or telco line-up is can other possible barriers be tested, including price of the handset, price of the subscription and need for dedicated handsets.

And even those attributes can only be truly tested when there's enough ability to download or stream video "over the top."

Comcast Triple Pay Adoption 18%

About 18 percent of Comcast customers actually buy the triple play. And there seems to be some resistance to the notion, despite its fundamental importance for both cable and telephone companies these days.

Qwest executives, for example, have discovered they are leaving money on the table by not selling single play and dual play services more aggressively.

Comcast says it is going to do the same. The triple or quadruple play might be the fundamental packaging strategy.

That doesn't mean every customer is going to buy such a package. And there are lots of reasons why that could be the case. Lack of interest, lack of money, lack of one specific feature, inability to use subscriber identity modules, lack of availability of a specific handset or programming network, contract terms, sticker shock and lack of awareness all can be barriers to triple or quad play adoption.