Analyst: Apple Revolutionizing Movies

January 16th, 2008 at 2:00 PM - Apple Stock Watch by Jeff Gamet

Appleis new iTunes movie rental service may not have been an overwhelming surprise when CEO Steve Jobs announced it during his keynote presentation at Macworld Expo 2008, but it may herald the beginning of a revolution in the movie industry. The deal with the movie studios will likely turn out to be far more significant than most give credit for, according to American Technology Research analyst Shaw Wu.

"On the surface, the announcements look underwhelming and somewhat expected," he said. "However, we think when looking back several years from now the iTunes Movie Rentals announcement will likely end up being a landmark event and potential game-changer."

The big surprise for most wasnit that Apple launched its movie rental service, but instead that the company struck deals with all of the major film studios including Fox, Disney, Warner, Paramount, Universal, Sony, MGM, Lionsgate, and New Line Cinema. The general consensus was that Apple would launch its rental service with only one or two studios.

"We find this quite impressive in light of Appleis sometimes tough relationship with content providers and their fear of Appleis domination of online content," he said.

The ability to rent and download may also lead to higher Apple TV sales, turning the home theater appliance into "a real business" according to Mr. Wu.

Mr. Wu is maintaining his "Buy" rating and US$210 target price for Appleis stock. Apple is currently trading at $159.50, down 0.14 (0.09%).

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