Apple Nearing Agreements with Movie Studios
29 January 2008It might be shocking to know that Apple CEO Steve Jobs is actually
starting to win over the film industry. While Jobs practically
invented the marketplace for digital music, Apple has been
struggling to get into the video market. Apple TV was all but a
flop, selling just under a million units, and iTunes still doesn’t
offer the selection of movies that would draw in everyday consumers.
But now it seems that Apple and a lot of the big studios are getting
close to a compromise on those major issues that have prevented
iTunes from offering a selection of movies that a consumer might
find at a major video store.
BusinessWeek reports that Apple is nearing agreements with the big
studios, but none of the companies are ready to announce that yet.
Analysts predict that Jobs will likely agree to pay the $17
wholesale price for movies sold through iTunes, though he previously
refused to pay more than $14. The $17 price is about what studios
get for physical DVD sales at major retailers.
Some of the studios, meanwhile, appear to be backing down from their
refusal to allow online downloads of new movies until a month or so
after DVDs of those films arrive at stores.
While these deals could boost sales of Apple TV, the company needs
to work on that product as well. The device, which streams video and
music on a home computer’s hard drive to a TV or home theater,
suffers from poor audio and visual quality compared with rival
products. Apple TV can only access YouTube for videos, and the
device can’t even browse and download iTunes content using Apple TV.
Users have to get content from iTunes using the computer.
The next generation of Apple TV is expected to address a number of
these shortcomings, but a wider selection of films on iTunes would
certainly help.
According to BusinessWeek, Apple has sold only two million movies on
iTunes, compared with 100 million TV shows and more than one billion
songs.
The Financial Times reported last month that Apple had already
signed an agreement with one studio (Fox) to offer rental downloads
of movies. Now it seems as if Apple is nearing deals with Warner
Bros, Paramount Pictures, and Lionsgate to allow movie sales,
rentals or both through iTunes.
Even Sony is said to be contemplating a deal to sell its movies
through iTunes. How long until Universal jumps in on this?
Universal’s parent company is NBC, which pulled its TV shows from
iTunes over a pricing dispute.
The rental terms are still a bit muddy. Jobs wants the movies to be
available for rental/download the same day they are available to buy
in stores. Typically, electronic rentals, like video-on-demand with
cable companies, have always been delayed 30 days from the movie’s
DVD release date.
Fox is not requiring that waiting period, but other studios are
still in talks about the issue, says BusinessWeek. Warner Bros,
which offers some movies through Xbox on the day the DVD is
released, is said to still be contemplating Apple’s demand.
Obviously, Apple getting into the movie download business will be no
where near as easy as it was to get into music downloads.
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