Apple Gives Disney a Juicy New Bite

Source: http://www.flickr.com/photos/edgarzuniga/

Apple (NASDAQ:AAPL) and Disney (NYSE:DIS) are teaming up on a new digital movie service that will allow people who buy Disney films to access them via the cloud on a variety of Apple’s devices. The service, called Disney Movies Anywhere, deepens a previous relationship between the two companies.

The service works through iTunes on Apple mobile devices. Customers will be able to buy and watch movies from Disney, Pixar, and Marvel exclusively through iTunes on iOS devices. The debut of the service coincides with the release of Disney’s hit movie Frozen, and customers for a limited time will receive a free digital download the the Pixar film The Incredibles when they activate Disney Movies Anywhere through an iTunes account.

“Disney Movies Anywhere is an adaptable digital ecosystem designed to help consumers consolidate their Disney movie collections and enjoy them for years to come,” said Jamie Voris, Disney’s chief technology officer, in a press release. “The beauty of this technology is that it enables us to work with iTunes and future provider partners to ensure movie lovers have streamlined access to all of their favorite Disney titles no matter which device they are on.”

Disney said that it has issued codes for redeemable digital products in many of its DVD and Blu-ray movies since 2008. Owners of Disney DVDs and Blu-rays with such codes can use them to obtain digital copies of those films through the Disney Movies Anywhere library. Disney films previously purchased via iTunes will also transition to the new service once Disney Movies Anywhere is activated. The total library will contain more than 400 titles.

In recent years film studios have had to contend with slumping DVD sales as consumers have come to prefer digital, cloud-based movies that don’t necessitate owning a physical product that can be scratched or lost. According to data released by the Digital Entertainment Group, digital sales of movies topped $1 billion for the first time in 2013, growing 50 percent versus 2012. Overall, total consumer spending on home entertainment reached $18.2 billion in 2013.

Disney Movies Anywhere competes against the open-source UltraViolet movies-in-the-cloud service that much of the rest of Hollywood is getting behind but has been spurned by both Disney and Apple. UltraViolet was created as a way to give consumers access to a digital copy of a film they’d also purchased in a physical format like DVD or Blu-ray. DEG said in 2013 UltraViolet accounts grew to 15 million, and the platform is supported by the majority of retailers.

According to a report from the Financial Times, Apple and Disney have a long history of cooperation, since Disney became the first movie studio to offer its films for purchase through iTunes. Former Apple CEO Steve Jobs sold Pixar to Disney in 2006 for $7.4 billion and after that, Jobs served on Disney’s board, advising Disney CEO Bob Iger on tech.

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