iTunes Set To Launch Movie Rental Service
There’s been a lot of speculation in the news lately about Apple’s desire to get into the video downloading business. It started last year when they started selling downloads of TV shows, but they’ve never actually been able to offer more then a handful of films for sale on their site.
One reason why the studios have been so quick to license TV shows, but so slow to license films is that with the widespread adoption of TiVo and other PVRs, the studios have come under increasing pressure to create new revenue streams on the broadcasting front. Meanwhile, the rise of Walmart and the success of DVD sales have made studios reluctant to jeopardize their DVD revenues by offering a compelling low cost VOD solution. It’s a tough balancing act for the studios to maintain, but thus far they’ve been reluctant to cross the line between films and television without huge licensing fees and cumbersome copyright restrictions.
Recently, it was reported that Apple had gotten stuck in their negotiations with Hollywood over wanting to charge a $9.99 fixed price for all movies, compared to the variable pricing that the studios want. Studios typically like variable pricing because their standard M.O. is to spend a lot of money on marketing all and once in order to earn as much as they can from a film before dropping support for it and moving to the next flavor of the week. While this is remarkably effective at driving demand to the most popular films, it does little to create demand for longtail titles that people have forgotten about. Because of this, they want to be able to charge more when demand is the hottest and then use a lower price to help continue to create demand once a film has been moved to archived status. When Apple balked at the variable pricing, the whole idea of iMovies was put at risk, but Think Secret is now reporting that Steve Jobs is moving away from the idea of paid downloads and instead is set to launch an Apple rental service in August.
“Apple is said to have ironed out agreements with Walt Disney, Universal Studios, Paramount Pictures, and Warner Bros., and is currently in talks with other major movie studios as well. It’s unknown to what extent content will be available come the August 7 announcement, or whether Apple will announce all of its studio deals at that time.”
Details are still sketchy and it’s worth pointing out that this is still a rumor, but the service would either have restrictions related to the number of times you could watch a movie or it could have a time period that you have to watch it in. If this does turn out to be the direction that Apple is heading with their VOD, I would think that it would be a mistake. In today’s digital age, consumers don’t want to have to rush home to watch a movie before it expires, nor do they want to have restrictions put on what they can do with their content. A much better solution would be for Apple to adopt something similiar to Napster’s subscription music program. For one monthly fee, they could allow consumers to download as many movies as they want. Make the films portable to laptops, digital video players and TiVo/Media Center and you’d have a real hit on your hands.
Posted on July 18th, 2006 by Davis
Filed under: VOD