Sony Corp. is considering offering movie downloads to compete with Apple Inc.'s iTunes and iPods, company officials said Tuesday.

Sony, with Spider-Man as its flagship movie franchise, says it is considering a download service to compete with Apple.
(Columbia Pictures)

"Music and video downloading has been available through networks, and we are looking into the area as a possible business," Sony spokesman Shigenori Yoshida told the Associated Press.

Sony has fallen behind rivals in a number of businesses. The Japanese company, which created the portable music market in the 1980s with its Walkman, was late to the game with digital players and gave up much of the market share to Apple. Sony also fell behind in flat-panel televisions and has given up much of its lead in video game consoles to rivals Microsoft and Nintendo.

Movie downloads, meanwhile, are expected to grow significantly. According to London-based researchers Screen Digest, the U.S. and Western European market is expected to be worth $1.3 billion US by 2011, or about three per cent of all home movie revenue, up from a paltry $50 million US now. Of that market, Apple currently has an estimated 80 per cent, the researchers said.

For movie studios, downloads promise a highly profitable revenue stream, with wholesale prices to service providers such as Apple or Microsoft ranging between 70 per cent to 105 per cent of the consumer price on the latest new film releases. The manufacturers, meanwhile, use the movie downloads — sometimes selling them to consumers at a loss — as a way to sell devices.

As such, downloads will become a low-margin business for service providers, and only those with a strong hardware position will be able to absorb the cost, the researchers said. Apple with its Apple TV, Microsoft with its Xbox 360 and Sony with its PlayStation 3 are likely to take up about 90 per cent of the business by 2011.

"At present, there simply isn't adequate penetration of these devices — and the idea that people will en masse watch a two- or three-hour movie on [a computer] just isn't realistic," said Screen Digest senior analyst Arash Amel. "It will take time to reach a wider market penetration with these new devices, and we believe that this will start to become more mainstream beyond 2011."