iTunes Opens Gates to Canadian, UK Movie Buffs

iTunes users in Canada and the United Kingdom will now be able to download and rent movies from Apple's (Nasdaq: AAPL) online store.

Canadians will be able to choose from over 1,200 films such as "Juno," "I Am Legend," and "Cloverfield" from movie studios including 20th Century Fox, Paramount and Sony Pictures. More than 200 of the available titles for rent come in high definition.

Those in the UK will have a library of over 700 films, Apple said. The British rental catalog also features over 100 titles available in high definition.

The Canadian movie downloads range in price from CA$9.99 (US$9.83) for catalog titles to CA$14.99 ($14.75) for a recent release and CA$19.99 ($19.67) for new releases. Rentals run CA$3.99 ($3.93) for library titles and CA$4.99 ($4.91) for new releases. High-def rentals will cost CA$1 ($0.98) more.

Those with a valid credit card and billing address in the UK will have to pony up Pounds 6.99 ($13.66) to download a library title and Pounds 10.99 ($21.47) for new releases. Movie rentals are priced at Pounds 2.49 ($4.86) for library title rentals and Pounds 3.49 ($6.82) for new releases. High-def rentals will cost an additional pound ($1.95).

Engineering Scarcity

The expanded offerings for Canada and the UK come several months after similar services became available for U.S. residents. While the time between launches may seem long to consumers anxious to use their iPods and computers to view movie downloads, it's par for the course, according to Mike McGuire, a Gartner (NYSE: IT) analyst.

"It's not unusual because this is as much as anything else about the licensing of content through different distribution channels and controlled by regions as well," he explained.

For all practical purposes, universal and global online music services and stores don't exist. That's because of the way companies that own the content -- not technology companies or service providers -- license that content, McGuire continued.

"A big chunk of that is a real important business prerogative, for them to be able to create and maintain scarcity by controlling the regions and the media format that content -- movies, TV shows -- are distributed on," he pointed out.

Companies manufacture scarcity using a familiar tool -- release windows.

"A movie title is in theatrical release for several months out of the year starting in the U.S. for a couple of months. Then it may open overseas -- though ... increasingly movies are released worldwide at the same time now -- and then there are a whole slew of windows. You might see it in hotels and on airplanes, pay-per-view, DVDs and then 30 days later on online services. But all those windows are staggered in effect to create scarcity from one channel to the next," McGuire said.

Coming Soon Online

The emergence of the online movie download market, however, has put a kink in the staggered window system content owners have created.

"What we're seeing with online -- they are trying to preserve the integrity of the existing windowing system. That's why Apple didn't open iTunes stores around the world. They had to license content to be sold online in each country of the world," McGuire told MacNewsWorld.

iTunes, Amazon (Nasdaq: AMZN), Netflix (Nasdaq: NFLX) and any other online download or streaming service started in the U.S. will have to confront the lengthy process of negotiating with movie studios and other content owners as they try to expand.

"What holds them up is not a technology question. 'Oh my God can we get servers?' or, 'Is there enough broadband in this country?' That's typically not it. What it is is that they have to go get and negotiate the catalog as well as a lot of local or indigenous content. Not everybody wants to see exactly what everyone in the U.S. sees," McGuire noted.

For instance, in France, where Apple announced last week it has begun offering television shows from French networks alongside American selections, negotiations to add movies to the service may conclude by the end of 2008, according to McGuire.

The nascent movie and TV download segment is much the same in Canada, the UK and Europe as it is in the U.S -- held up by the need to negotiate with content license holders.

"It's all relatively new, and no region has greater demand than others. A lot of this is because of the license holders and creating the services. As more content flows to these services, you'll see an increase in uptake. The UK has a pretty vibrant online community, and it's growing, but they are still not the same size and scale of the U.S.," McGuire added.