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Universal launches movie downloads... at DVD prices

Defining the market dynamics before Apple can?

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Analysis Lovefilm.com will next month extend its full-length movie download service from rentals to pay-to-own. It will kick of the offer on 10 April with the latest King Kong remake, charging £20 for a copy of the DVD and a pair of digital downloads, one for desktop usage, the other for portable media players.

The scheme, a joint venture between Lovefilm and film distributor Universal Pictures International (UPI), pitches the downloads as free adjuncts to the DVD. Essentially, buy the DVD and you're spared the 'effort' of ripping it. UPI presumably hopes that since it's supplying the ripped copies, and they're suitably DRM-protected - using Windows Media technology, so the service is totally useless to the millions of iPod owners out there - then fewer rips will leak out onto the Net and fewer copies made for consumers' chums.

Of course, since the DVDs are available separately, most of them for rather less than £20, it's questionably how successful this will be. What's to stop buyers keeping the download and selling the DVD on eBay, for example? Will viewers of the downloads need to insert the DVD into their PC every so often to 'validate' the package? It does nothing, it seems, to stop folk from renting the disc for a fiver and ripping it for future viewing.

Had Lovefilm been granted the right to offer the movies as 'pure' download product - one that would certainly complement its current rental download service, launched in December 2005 - that would indeed have been as revolutionary as the partners' press statements claim the service will be. It's a "landmark development", apparently. It could offer a high-resolution version at one price band, and a low-res copy at a lower price point, leaving the consumer to choose whichever best suits the way they want to watch the film.

Bundling the DVD is clearly about maintaining price parity with the physical product. The partners appear to believe no one will pay full whack for the download minus the extras, but they seem unable to see that the logical move, then, is to sell the download for less, as an alternative to DVD, just as renting a movie is an alternative to buying it outright.

There's also a political dimension: it's hard to believe the scheme isn't as much about defining a price point before Apple gets in on the act and - as it did with digital music downloads - gets to pick a price, picture resolution and business model that suits it better than the studios.

The irony is, future optical disc formats HD DVD and Blu-ray Disc will offer the opportunity to copy their contents for use on other devices, courtest of the Managed Copy facility currently being developed for the formats' AACS copy-protection system. Managed Copy isn't there yet - early next-generations systems won't have it - but it is part of the specification.

Whatever, Lovefilm and UPI plan to offer 29 more new-release movies in this fashion and eventually fill out the service with back-catalogue material over time. ®

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