Our take...
By launching in Australia and New Zealand Apple is continuing its pattern of rolling out movies in English-speaking countries. Outside its domestic market the company has previously added movies to the iTunes store (iTS) in Canada and the UK.

Excluding a handful of markets, Screen Digest expects the addition of movies to the iTS to kickstart transactional online movie consumption in most territories. The device-centric nature of the iTS – integrated with the iPod/Apple TV/iPhone ecosystem – drives content sales. Prior to Apple's announcement only one significant online movie store was operational in Australia – BigPond Movies – and no transactional services were generating meaningful numbers of downloads in New Zealand.

The addition of movies comes less than two months after television shows were added to the Australian iTS. At the time Screen Digest noted the detrimental effect broadband data caps might have on the uptake of Apple's video download services in the country. At around 1.5GB a typical SD movie download would cause many customers to exceed the data limits imposed by their ISP. In Australia the incumbent, Telstra, offers plans with data caps starting at just 200MB although more expensive tiers include higher usage allowances. If a consumer exceeds the cap, they may be charged AU$0.15 for every additional MB or their broadband speed may be slowed to 64kb/s. Similarly Telecom New Zealand's most popular broadband plan has a 3GB monthly data limit.

However, Australian ISP iiNet has an exclusive agreement with Apple to provide its subscribers with unmetered downloads of music and video files from iTunes. At present the number of consumers benefitting from this deal is small – at the end of 1Q 2008 iiNet had just a 5 per cent share of the country's retail broadband market. But as subscribers to rival ISPs begin to download large video files from the iTS, potentially exceed their data limits, the Apple-iiNet agreement may help to persuade consumers to migrate to iiNet's service if they fall within the ISP's coverage.

The launch of movies on the iTS serves to highlight the data limits imposed by ISPs in Australia and New Zealand and the ease with which consumers can exceed them as online video viewing becomes more widespread. ISPs introduce caps as a means of limiting data transferred across their networks and consequently limiting the costs incurred by its delivery. However, transactional video services such as iTunes are unlikely to be responsible for the majority of video data transfer. In the US, for example, Screen Digest forecasts that transactional television and movie services will comprise just 25 per cent of all video data transfer in 2012. Rather, it is free-to-view online television services (such as that launched by Australian broadcaster ABC in July 2008) which will account for the largest portion of video data transfer and will therefore have a more significant impact on ISPs' margins.