Innovation and New Product Development Case Study

Apple Ventures into Movie Downloads

OR

Abstract:
Apple, a Fortune 159 company, was the market leader of online legal music downloads and handheld music players. In September 2006, it expanded its presence in the video on demand market and began offering online movie download services through its iTunes stores which sold music and television shows. But here, the scenario was different. Apple became the market leader of online music downloads due to its first mover advantage in the music downloads market and also due to cooperation from the music companies which were threatened by music piracy. But in the movie downloads business there were already a few players who have been operating for a number of years and Apple was also expected to face competition from the new entrants. Apple also got low cooperation from the movie studios due to its pricing strategy. Added to these, the quality of movie downloads was only almost DVD quality which was contrary to the high quality offerings like the HDTV’s, HD-DVD and Blu-ray, which was gaining popularity in the US

This case facilitates discussion on whether Apple would succeed in its Movie Downloads venture. It also enables the students to understand the issues involved in the launch of a new technology service and develop relevant marketing strategies.

Pedagogical Objectives:

• To discuss the online movie download business in the US
• Challenges faced by Apple in its movie download business venture
• Consumer trends in home entertainment.

Keywords : Apple; Movie downloads; iPod; Music downloads; Innovation Management Case Study; iTunes; DVD and Video market; Online movie market; Amazon; AOL; News Corp.; Technical services; VOD service; Picture quality; Downloading time; Technological difficulties

Contents:

• Background
• Apple Enters the Living Room
• Competitors
• The Road Ahead