HOT OFF THE WIRE

Disney Starts Online Movie Service in ITunes Alliance

Walt Disney Co. (DIS) started an online movie service, Disney Movies Anywhere, with Apple Inc. (AAPL)’s iTunes to increase sales of films such as “Toy Story” that can be stored in Web-based accounts.

Movies can be played on Apple’s iPad, iPhone and iPod Touch, as well as through the Internet, Burbank, California-based Disney said today in a statement. Users will be able to link to iTunes and import films they’ve previously purchased there to Disney Movies Anywhere accounts.

The service underscores a longstanding TV and film alliance between Disney, the world’s largest entertainment company, and Apple. Disney’s ABC television programs were the first to appear on iTunes in 2005, and former Apple Chief Executive Officer Steve Jobs sat on Disney’s board. Both companies stayed out of a movie-industry initiative called Ultraviolet, meant to let users buy movies from any studio or retailer and store them in a cloud-based library.

“Disney Movies Anywhere could stabilize Disney’s home-entertainment business, which has experienced lower results for five consecutive years,” Drew Crum, an analyst with Stifel Nicolaus & Co., said in a report. He recommends buying Disney stock.

Disney fell 0.6 percent to $80.21 at the close in New York. The shares have advanced 5 percent in 2014, while the Standard & Poor’s 500 Index is little changed.

Movie studios have been struggling with a decline in DVD sales since the mid-2000s, when home-video revenue accounted for more than two-thirds of film-industry sales.

Changing Habits

Audiences at home have turned to subscription services such as Netflix Inc., or one-time movie rentals, available on iTunes, Amazon.com, or through their pay-TV provider. These transactions provide smaller profit margins to the studios.

Sales of DVD and Blu-ray discs fell 8.1 percent to $7.8 billion in the U.S. last year, according to the industry’s Digital Entertainment Group, while electronic sales advanced 47 percent to $1.19 billion. Total sales declined 3.3 percent.

Subscription streaming advanced 32 percent to $3.16 billion. Total home-video spending increased 0.7 percent to $18.2 billion.

To contact the reporter on this story: Anthony Palazzo in Los Angeles at apalazzo@bloomberg.net

To contact the editor responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net

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