Apple's iTunes sells movies on DVD release date

By Sue Zeidler

LOS ANGELES (Reuters) - Apple Inc said on Thursday it reached deals with top Hollywood studios to sell movies on its iTunes download service on the same day as the titles are released in DVD form, bringing its clout to a nascent market for video entertainment.

Apple shares rose more than 3 percent after the news as investors hoped the new movie sales would boost purchases of Apple's portable iPod media player and Apple TV, as well as fuel growth for iTunes.

Privately-held CinemaNow and Blockbuster Inc's Movielink already offer similar services for downloading movies on the same day as DVD release, but Apple's entry is expected to expand that market.

"Apple will increase awareness of digital downloads and it's clearly a good thing for the studios who want to offer viable digital alternatives," Craig Kornblau, president of Universal Studios Home Entertainment, told Reuters. "We think this is a game changer."

ITunes will offer new releases and catalog titles from Universal, 20th Century Fox, Walt Disney Studios, Warner Bros., Paramount Pictures, Sony Pictures Entertainment, Lions Gate Entertainment Corp, Image Entertainment and First Look Studios.

Movies available this week include "Juno," "American Gangster" and "I Am Legend." New titles will sell for $14.99 each and catalog titles for $9.99 each.

Apple launched a service for iPod and iPhone users to rent and download some movies earlier this year, but offering new releases could help it attract more consumers to video content on its devices, analysts said.

"It's actually a big deal, because when they were able to get parity (with CD release dates) on the music side, they were able to drive music sales," said analyst Shannon Cross of Cross Research.