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Online Movie Sales Take Off for Disney Company

The Walt Disney Company says it has sold 125,000 digital copies of its movies -- less than one week after making the films available for download through Apple Computer Inc.'s iTunes store. At prices ranging from $9.99 to $14.99, the new service has already generated more than $1 million for the company, which is best known for its animated feature films.

Anyone with a fast Internet connection can now watch his or her favorite Disney film on a portable video device such as Apple's iPod. Industry analyst Aram Sinnreich says Disney's success in the first week of its online venture shows there's a large market for online distribution.

"The reality is that consumers have already gotten hip to online video, downloading videos and TV shows like gangbusters [in a big way]. They are not going to stop anytime soon."

So far, Hollywood has resisted the idea of distributing movies over the Internet -- arguing that making near-DVD quality films available online was an invitation to piracy. But Disney, which currently has 75 titles available on the iTunes website, says online sales have not hurt the sale of its DVD's.

Company president, Bob Iger says, "Any time you give people more ways to buy something and more ways to actually consume or watch something, you're going to increase consumption, so I believe the pie is going to get bigger."

Iger projects revenues of up to $50 million in its first year and says plans are in the works to distribute more films on the company's website. Analysts say Hollywood studios and retailers are watching closely. Online retailer has unveiled its own digital movie service, which will offer new and older films along with TV shows.

"I think the promising signs from iTunes as well as other online video retailers as well as the tremendous uptick in consumer interest in online video has convinced them they finally have to take the plunge (jump in)," says Sinneich.

But some studios are taking a more cautious approach to digital distribution to appease retailers such as Wal-Mart. The global retailer is responsible for about 40 percent of the DVD's sold in the United States.