Here comes the iTunes Movie Store

While I'm sure that High School Musical is a fine piece of work, it's noteworthy not for its cast, production values, or even soundtrack. No, what's different about High School Musical -- what's revolutionary about it -- is that it runs for one hour, 39 minutes, and 41 seconds.

It is, in other words, a feature-length presentation. A made for TV movie, yes, but it remains a movie nonetheless. And it can be all yours for just $9.99.

It's not the first movie on the iTunes Music Store (iTMS). Apple has long sold short films on its store. And of course, despite its running time, High School Musical remains a television program. But at an hour and a half it has more in common with Dangerous Liaisons than Desperate Housewives. And while High School Musical is not definitive proof that Apple is getting into the movie retailing business, analysts say that's a logical next step that's certainly on the way once the company overcomes a few barriers.

"It would be consistent with Apple's direction to get movies on the iTunes Music Store, which is becoming more and more of a misnomer every day," NPD Techworld analyst Ross Rubin tells Playlist, "But today I don't think Apple has long-form video on there because the store is still primarily supporting the ipod."

To date video that supports the iPod has centered around shorter works -- music videos, television shows, "the kind of thing that could be reasonably consumed in a commuting session," says Rubin.

Rubin also notes that films and TV shows have two very different distribution models. "[TV shows] were not really competing with any other media, the incremental revenue provided a way to monetize access that didn't exist before. With movies it's a little different," says Rubin, pointing to existing distribution outlets, such as pay per view.

Jupiter Research analyst Michael Gartenberg also says that the iPod itself may be a barrier to entry for feature length works due to its size and battery life. "If you're watching a movie," says Gartenberg, "you want a device with a larger screen than current generation of iPod."

Another barrier analysts point towards is the Hollywood studio system, which thus far has been unwilling to embrace Internet distribution. Apple has to balance the best price point with rights and terms of purchase that are agreeable to both consumers and the studios, he says.

"Apple would have done it months or years ago if the studios had been willing," says entertainment industry analyst Tom Adams, of Adams Media Research.

Adams notes that studios have historically resisted Internet distribution for several reasons. Studios have been unwilling to expose their movies to the potential for being pirated. Furthermore, he notes that as long as packaged video sales maintained growth rates of 15-20 percent, studios had little incentive to explore other channels. Nor has video on demand, available via cable television, taken off in a big way with consumers. Yet Adams notes that all of this is changing, which could lead to a reversal of the studios' stance.

"Video sales have gone flat for the first time in five years," says Adams. "The reality of the piracy situation has finally become clear; it does not make it any worse by putting legitimate services on Web. In fact, you then have the opportunity to recoup some revenue being lost to piracy. And in our view, the rental model is flawed. Consumers are not as interested in renting movies. Even though it is now truly on demand, the video rental market has been in decline for four years."

"iTunes has shows what it is consumers want," he tells Playlist, "to own their content."

Yet there's another factor beyond the iPod at play as well. With its new iPod Hi-Fi, enhanced FrontRow media software and TV friendly connectors -- such as the new S-Video out on the the Mac mini--Apple has been increasingly making forays into the world of home entertainment. While Bill Gates famously declared that he wanted to put a computer on every desktop, recent moves indicate that Steve Jobs might be aiming for something similar: a Mac in every living room.

"I would see video coming as more of a push into the living room," says Rubin. "Certainly, with the new Mac mini, Apple talked more about connecting a computer to a television than they ever have before. This seems to be something they are dipping their toe in the water with."

In the interim, High School Musical may be something of a trial, a test case to see how consumers respond.

"It's an experiment, probably given the content, something that Apple is able to use to test the waters and see how it resonates with a particular audience and price point," says Gartenberg.

Currently High School Musical is listed at number four in Apple's Top 100 video chart. If that's an experiment, it would seem to be a success.