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I guess the streaming feature lends itself to more, but still, I don't forsee people buying 100 movies and keeping them all on their phone. Once I watch a movie 3 or 4 times I'm probably gonna take it off my phone and leave it on the computer no matter what format or size it is.

It really depends what the download format is. My best guess the movie inside the app is protected with some kind of Warner-specific DRM not FairPlay (which iTunes is using). This means I am at the mercy of WB - and if they decide to turn off their server then my app will revert back to demo mode ?
 
My best guess the movie inside the app is protected with some kind of Warner-specific DRM not FairPlay (which iTunes is using).



This is unlikely. Apple isn't keen on folks using other forms of DRM. Makes compatibility a bear.

It is more likely that the in app links to the itunes file. The issue then becomes rather the downloaded file lives as app data or as an independent file. And if it is an independent file and is via iTunes would it recognize in the app if you bought the file on your computer
 
Not sure I understand the logic of this move. Why should I buy these apps if for a comparable price I could buy a blue-ray and watch it on my 50" plasma in 1080p? A movie for iPad / iPhone could be interesting for somewhere less than 2 euro... at least for me.
 
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