Apple researching iTunes feature film movie service?

Exclusive: Apple Computer may be in the intermediate stages of developing an iTunes movie download service that would serve up full length feature films to iTunes customers with a broadband Internet connection, AppleInsider has learned.

A survey distributed this week through Coyote Insight, a Fullerton, Calif.-based market research firm, asked that participants answer a series of questions related to a potential "iTunes movie service" that would provide on-demand access to movies that could be downloaded to a computer or iPod.

"This iTunes service would provide access to 1,000 movies on demand which can be downloaded to your computer and, in turn, to your video iPod if you have one, or even your television if it is connected to your computer," read a description early in the survey. 

The service would function similarly to Apple's existing iTunes download services for songs and videos with one or two differences, the survey explains: "The first difference is you would need to have a high speed (broadband) Internet connection such as DSL or cable modem to use the service. The second difference is access to the movies is offered on a monthly subscription basis."

With the click of a button, users would be able to quickly download any of the movies through iTunes, which could begin playing as flick is downloading, according to the survey.

"You would have access to 1,000 movies including new releases like 'The Incredibles', 'The Pacifier', and 'Fightplan' as well as your favorites from the past," the description went on to read. "Watch as many movies as you want, as often as you want — all commercial free with no charge per view." Each month, the potential service would reportedly add new movies for users to choose from.

The survey asked participants to rate the described service on a scale of 1 to 10. Based on the same scale, it also asked that participants indicate how likely they would be to subscribe to the new iTunes service for a monthly fee of $9.99.

Still, it appears that Apple is looking for feedback on alternative pricing models — presumably if it gets the nod from its content partners, including major motion picture studios such as Miramax Films, Universal Pictures, Buena Vista Pictures, New Line Cinema, and Sony Pictures, according to a preliminary list of movies in the survey. 

"Instead of subscribing for $9.99 a month to download the offered movies, another option is to buy the movies individually," the survey reads. "You would be able to select any movie available on this service, download it to your PC where you can keep it as long as you like. You would be able to view it on your computer as well as play it on your video capable iPod."

However, the survey noted that this option would not allow users to burn a copy of the movie to a DVD for playback on a home entertainment DVD player. "The cost of purchasing movies individually would be approximately $12.95 per movie or roughly the equivalent of buying a DVD at a store," the description continued. 

Again, survey participants were asked to rate their interest in the buy-to-own service on a scale of 1 to 10, as well as the pricing structure — indicating which of the two described iTunes services they would favor most. As yet another option, a followup question asked participants to again rate their interest in the same $12.95-per-month subscription model if it allowed DVD burning.

The survey, distributed on Tuesday, also specifically asked participants whether they own Apple-branded iPod digital music players and computers, or "other brand" products.

Representatives for Coyote Insight declined to say whether the survey was issued by Apple or one of its competitors, citing confidentiality agreements with all of its clients. However, it would seem incredibly unlikely that another corporation would issue such an iTunes-focused survey without previously negotiating with Apple, given that the iPod+iTunes ecosystem is based on Apple's proprietary digital rights management (DRM) technology, which the company has so far been unwilling to open to competitors. In line with these thoughts, there have been recent reports of a push from Starz Entertainment for an iTunes/Vongo merger or partnership that could form the basis to such a service.

Indeed, both analysts and insiders have been expecting Apple to extend its reach into the digital download business with full length movies. They feel it's the next logical step for the Cupertino, Calif.-based company to fortify its stronghold on the legal digital download market.

Prior to Apple's media event this week, CNN Money ran a front-page story titled "Apple's big news: Lights, camera, Mac-tion!" The subtitle read: "The smart money is on movies."

Shaw Wu, an analyst for American Technology Research, also issued a research note just before the event, which hinted there was a 50 percent chance Apple would use the media gathering to unveil a full length feature film download service. 

The Apple media event failed to yield any such service, leaving a significant number of enthusiasts and industry watchers a bit disappointed and bewildered about the progress of Apple's digital media strategy. Instead, Apple introduced an Intel-based Mac mini and iPod Hi-Fi speaker system. 

"We wonder if the announcements were substantial enough to merit an invitational media event and suspect Apple needs to be judicious if it expects to continue to convert journalists into marketing instruments with its aura of secrecy," was the response from Richard Farmer, an analyst for Merrill Lynch. 

Meanwhile, PipperJaffray analyst Gene Munster offered similar sentiments. Like other analysts, he was also expecting a bit more from Apple on the video front, and explained in his own note that an AirPort wireless base station with video transfer capabilities would provide the company with all the necessary pieces to make a successful push into the living room.

If the recent market research survey is any indication, Wall Street and movie aficionados may soon get the iTunes movie service they've been anticipating for so long. While it's unclear how far along Apple is in its research and development of the service, it won't be long before Apple will once again draw the spotlight in order to bear its latest fruits.

In closing Tuesday's special event, chief executive Steve Jobs thanked analysts and members of the media for attending and said "we'll see you all real soon."