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To: Road Walker who wrote (2273)	2/8/2011 4:40:27 PM
From: sylvester80	Respond to of 3170

Apple’s Movie Business Faces Shrinking-Pie Problem The company controls market share, but consumer trends are troubling Feb. 8, 2011, 2:01 pm EST \| By Anthony John Agnello, investorplace.com Who says Apple (NASDAQ:AAPL) isn’t vulnerable? A new report from research group iSuppli found that Apple’s iTunes digital storefront lost major ground in the online movie sales and on-demand rental business over the last 12 months. Its near-75% share in 2009 dropped to just below 65% in 2010 – a completely devastating dropoff. The tongue here is, of course, placed firmly in cheek. Nobody selling movies online comes close to Apple’s control of the market. Microsoft’s (NASDAQ:MSFT) Zune store, which offers a comparable service to Apple’s and actually has more of a presence in the living room thanks to the Xbox 360 video game console, was at least partly responsible for the dip in iTunes’ market share. But it still only rose to an 18% share. Sony (NYSE:SNE) trails both, accounting for just 7% of the market. Other business, including heavyweights like Amazon.com (NASDAQ:AMZN) and newcomers like Wal-Mart’s (NYSE:WMT) Vudu, collectively control 10% of the market. The question now, however, is whether Apple’s digital video business makes it a big fish in a fast-shrinking pond. Consumers are becoming more interested in streaming services than they are in traditional sales models — like owning a movie or even renting it. Netflix’s (NASDAQ:NFLX) astronomical growth over the course of 2010, jumping from 11 million subscribers to 20 million in just 12 months, is proof enough that audiences are more interested in paying a flat monthly fee for access to a wealth of home video content than they are in dropping $15 for a digital copy of some middling Hollywood fare they may only watch once on their laptop. Even with commanding control of the digital sales and rentals market, Apple is already feeling pressure from streaming services like Netflix and even Hulu, the streaming video joint venture owned by Comcast (NASDAQ:CMCSA) and General Electric’s (NYSE:GE) NBC Universal, Disney’s (NYSE:DIS) ABC, and News Corp.’s (NYSE:NWS) Fox. Apple ran afoul of those three television companies as well as CBS (NYSE:CBS) last summer when it attempted a 99-cent television episode rental program that kicked off when the new Apple TV set-top box was released last fall. News Corp. and Disney especially felt that Apple was undervaluing their products in its efforts to boost declining rental sales. The odds are good that Apple is already moving to modernize its home video business. Piper Jaffray analyst Gene Munster said in an investor note last Thursday that Apple’s recent clandestine investment of $3.9 billion in LCD screen components signals that the company is going to get into the television business by 2012. Munster believes Apple will spearhead the push for Internet connected television adoption with a line of TVs with screens up to 50-inches. With a television app store likely to be a part of the overall TV strategy, a subscription-based streaming option to compete with Netflix and Hulu would be natural for Apple. Until those plans come to light, investors should expect iTunes to maintain its dominant market share. That market share, however, will represent less and less revenue as consumers increasingly adopt streaming services. At the time of publication, Anthony John Agnello did not own a position in any of the stocks named here.

To: Road Walker who wrote (2273)	2/8/2011 4:41:28 PM
From: sylvester80	Respond to of 3170

Report: iTunes Music Sales Fall 5 Percent Amid General Decline in Demand Share 8 comments » By Ed Sutherland (7:29 am, Feb. 08, 2011) cultofmac.com Remember the heady days of music sales, when Apple beat the stuffing out of traditional music labels, even besting retail giant Wal-Mart as the No. 1 seller of music? Well, the Cupertino, Calif. company still leads, but the growth of music is slowing and appears to be giving way to video. Revenue from digital music sales for the last three months of 2010 were up just 1.6 percent for Apple, falling 5 percent from the previous quarter, according to a Tuesday report. Although Apple’s digital music sales are slowing, Warner Music Group appears even further along the S-Curve; the publisher’s last quarter sales fell 14 percent, the company announced. For Apple, the next thing is digital video, where one research firm says the tech giant controls almost 65 percent of the sales. Apple iTunes accounted for 64.5 percent of all 2010 revenue from electronic sell-through and Internet video on demand (IVOD), keeping at bay retail heavyweights such as Microsoft, Amazon, Sony and Wal-Mart. The introduction of the iPad and the upgraded Apple TV helped the Cupertino, Calif. company maintain its lead, according to market researcher iSuppli. “We expect that in the United States, Apple’s strong performance in IVOD will allow it to continue to bypass the video-on-demand services offered by many major cable operators,” the researcher announced. Microsoft’s Kinect 3D motion sensor system for the Xbox 360 helped strengthen its No. 2 position, accounting for 17.9 percent of U.S. electronic sell through and IVOD consumer spending. That’s up from 11.6 percent in 2009. Sony held the No. 3 ranking last year with 7.2 percent, according to iSuppli.