Fallout of Apple's iTunes Movies Announcement in Australia

Vishal Thursday, August 14, 2008 , , , ,

Telstra announced yesterday, the launch of their Bigpond Music Platform, a venture into online music industry by offering tracks from all major record labels in a format (MP3) that could be transferred between most music players, including the iPod, Sony Walkman, Xbox, PlayStation 3 and home media centres.

This offering is in direct competition to Apples iTunes offering which is a walled garden or a closed system. It was clear how Telstra is opening up another front with Apple in their ongoing battle in Media & Mobile space. The next obvious step for this platform would be online rental movies as Telstra has a service for its rental movies under BigPond Movies Entertainment
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While pundits were still analyzing the impact of Telstra's new service, Apple has hit back with the announcement that movies from major film studios including 20th Century Fox, The Walt Disney Studios, Paramount Pictures, Warner Bros. Entertainment, Metro-Goldwyn-Mayer Studios Inc. (MGM), Sony Pictures Television International and Lionsgate are now available on the iTunes® Store in Australia and in New Zealand. In a press statement released today at their site, it says:

“Movie fans in Australia and New Zealand can choose from a great selection of over 700 films for purchase and rent on the iTunes Store,” said Eddy Cue, Apple’s vice president of Internet Services. “iTunes provides an incredibly easy and fun way for people to discover and enjoy movies, and has quickly become the world’s most popular online movie store with customers renting and purchasing over 50,000 movies everyday.”

Movie purchases and rentals feature iTunes’ legendary ease of use, which makes discovering and enjoying movies as simple and easy as buying music on iTunes has always been. The iTunes Store in Australia and New Zealand feature over 700 films for rent or purchase, with new release titles available for purchase on the same day as their DVD release, including favorites such as “National Treasure 2,” “Jumper,” “27 Dresses,” “Cloverfield,” “Vantage Point” and “Pirates of the Caribbean: At World’s End.”
Bang!, take that, Telstra :-).
Well its not surprising what has come out as it is a natural path for iTunes expansion offering, but what is surprising is the timing of this announcement. It looks like Apple knew beforehand what's coming and waited to see what Telstra is doing before they announced this.

What Telstra now need to do is, is to re-brand this BigPond Movies Entertainment
to Bigpond Entertainment and start offering online music announced yesterday and online movie rental & purchase; otherwise it will start hurting Foxtel revenue soon.

For Foxtel it’s more worrying because iTunes is a free software and is pretty much available on everyone’s pc/laptop who has an iPod or some other apple device. It will be safe to say that there are more Apple devices (esp. iPod) then Foxtel’s set top boxes in Australia. This will definitely hurt Foxtel.
Foxtel


In addition to this the real disturbing trend for Telstra is, that it's role as a facilitator of rich media content or say hope of being a Major Media player in Australia is under severe threat now. Rich content can be consumed from anywhere across the globe as long broadband infrastructure is good enough - It's a flat world and an example of this is Youtube.

So Telstra’s role as a carrier will still be predominant in future no matter what others say but their revenue in Media sector will be under severe pressure. This might be one of the reasons why even after doing so well in FY08 the share price is down 4% since yesterday.

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