Movie rentals coming to iTunes Store?

Stephen Withers
Monday, 11 June 2007 11:14

Your IT - Home IT

The Wall Street Journal dug a bit deeper and cited "two studio executives familiar with the matter" as saying the plan, which is apparently far from settled, would involve $US2.99 rentals for an unspecified number of days.

That would leave 49c gross margin for Apple, out of which must come the storage and bandwidth costs, plus all the other overheads. How much profit would be left? It seems like a lot of trouble just to sell more Apple TVs at or near breakeven prices.

The WSJ shed little light on the studios involved in discussions with Apple, noting only that Paramount is in favour and Universal is against the plan.

According to the article, "Copy protection is also an issue for the rentals, as Apple wants titles to be able to play on not just the computer but a second device such as a video iPod. Some studios believe that policy may result in lost sales or rentals." If that's an accurate report, what planet are these studio executives from? Do they really think we are going to buy or rent one copy of a movie for our kids to watch on the TV on a wet Saturday and then another copy of the same title to watch on an iPod in the back of the car while we drive to Grandma's for Sunday lunch?

To misquote The Castle, "Tell 'em they're joking!"

All that said, do movie rentals from the iTunes Store make sense? Yes. The real question is whether Apple can structure a deal that makes financial sense for itself while keeping the studios happy. They managed it with older movies from several studios (and newer titles from Disney), so it should be possible.

But if an AppleInsider poll held last month is anything to go by, one other factor will be essential to the success of an iTunes movie rental service. 48 percent of respondents said they would neither rent not buy movies until Apple improved the video quality of its downloads (ie, it offers high-definition downloads).