Report: Apple in negotiations with movie studios; $9.99 feature films coming to iTunes soon?

“Five years ago, when Steve Jobs was in negotiations to sell songs on iTunes, he gave music execs a choice: Either work with me or get left in the dust,” Ben Fritz reports for Variety. “They worked with him.”

“But even though the deals may have helped save their business from piracy, many in the music industry now call it a devil’s bargain. Apple now commands more than 80% of the growing digital music market and has a huge influence on how much such music will cost,” Fritz reports.

“It’s that type of clout that makes many in the film industry nervous as Jobs and Apple negotiate to extend iTunes to feature-length films, a natural step after the store added TV shows last fall,” Fritz reports.

“Since 2001, when Apple introduced the iPod digital music player and iTunes software, followed by the iTunes Music Store, the company has undergone a radical transformation. In just five years, it has sold 1 billion songs, and since last October, 15 million TV shows and music- videos,” Fritz reports.

“As for adding movies to iTunes, Jobs personally heads up most negotiations, although VP Eddie Cue has taken up some of the slack as competing studios are wary of doing business with a member of Disney’s board,” Fritz reports.

“Studios have resisted Jobs’ initial insistence that feature films be priced at the easy-to-remember $9.99. After all, library titles are typically sold to Wal-Mart and Best Buy significantly cheaper than new releases. Studios now are trying to convince Apple to sell similar content at multiple price points, something the company has never done,” Fritz reports.

“Also complicating the deals: The studios are working out terms with a host of other distributors, including Amazon, Movielink and BitTorrent, in part to make sure that one company does not dominate. It seems that none of the studios wants to be first in making a deal with Apple. Disney would be the logical leader, but even they are cautious, fearing it will look like in-house synergy rather than a business decision,” Fritz reports.”

Full article here.

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Related article:
Apple releases iTunes 6 with 2,000 music videos, Pixar short films & hit TV shows for $1.99 – October 12, 2005

28 Comments

  1. “Again, i’m pretty sure we’ve already discussed this. I don’t want to pay $10 for a low res movie when I can buy it at walmart for $10-15 and rip it my self – that is the best of both worlds.”

    Agreed – but why even rip? Just shelve the DVD…nice packaging, great resolution, extras, and no wasted cpu cycles to put into a vastly inferior, though slightly more convenient format.

  2. Whatever happens, it will be successful because of the lack of brains in some people. Because they will have the ability to download a movie, they will be glad to pay $10 to get a 320×240 movie when they could pay the same price or even less to have a DVD. Remember, a lot of people have no problem spending $1.99 for a friggin ringtone.

    Even if the movies can be downloaded in the same resolution as DVD (720×480), I’ll still have no interest. I didn’t put in a home entertainment center in my den so I could watch movies on my computer.

  3. I could see the multiple price points for different resolutions, 9.99 for iPod, 12.99 for 17 inch, and 15.99 for full HD with surround sound. I could also see a premium, say 19.99 for HD movies released at the same time as in the theater. Having a two year old daughter means no new movies. This is also a place where a subscription model would make a lot of sense since most people rent their movies anyway. I can assure you that the movie studios aren’t worried about lowering prices for older movies (even though that’s their argument), but raising prices for newer movies. This allows them the option of raising prices on all their movies, while giving the consumer the choice of what to pay.

    And by the way, movie theaters have standard pricing, so why can’t iTunes?

  4. I’ve ripped all my DVDs using Handbrake and have a little 100GB bus powered HD which I take on the road with me. It’s great to have my media so portable. But I agree, why would you pay $9.99 for a low-res version when Walmart can sell you the DVD for that much or less.

    Unless, the $9.99 price is for New Releases.

  5. Interesting that the Apple-Disney connection is already yielding negative side effects. It came up twice in the article:

    1. “competing studios are wary of doing business with a member of Disney’s board”
    2. “Disney would be the logical leader, but even they are cautious, fearing it will look like in-house synergy rather than a business decision”

  6. Clearly, the only model that works (pricing-wise) is a tiered approach. Somebody already mentioned a triple price-point setup, and that’s where it will have to land. Jo Mama ain’t gonna pay $9.95 for Smokey Y El Bandido after shelling out the same amount for King Kong. Once they get that figured out, though, this just might… work.

  7. “I never buy or rent movies, that’s why I pay my cable company good money to receive HBO/Cinemax, Showtime/TMC, and Starz/Encore. I could care less about DVDs or downloads.”

    Have you shelled out for one of those VCRs yet, or are you still trying to decide between VHS and Betamax?

    I enjoy paying a lot less for just basic cable, plus $18 a month for Netflix. At any given time I have 2-3 movies (of my own choosing) that I can watch at any time I want. Plus I could go to a couple of movies in the theater every month and I imagine I’ve still paid a lot less than you.

  8. True, iTMS hasn’t veered from charging different price points for songs (thank Jobs for that!), but they do have different prices for albums. Most are $9.99, but if there are fewer than 10 songs, the price is usually 99¢ a song, and still others are $11.99, for no apparent reason. Then there are double albums which seem to range from $18.99 to $24.99. I really want individual songs to stay at 99¢ but it wouldn’t bother me if they varied the price of movies.

    As a side note, “Curley” said, “Having a two year old daughter means no new movies.” Good for you. I, too, have an almost two year old, and my wife and I have also made the decision to not take him to the movies with us (which means we don’t go either). I can’t stand it when parents bring their little kids to the movies! Once my wife and I saw a movie that started at 10pm and this couple brought three kids with them, all under the age of five (the movie was rated “R”), and the kids spent the whole time crying, talking loudly, and chasing each other through the aisles. It kills me that people act like that. When you become a parent, you have to make sacrifices. You don’t get to do whatever you want and just drag the kid along. Regardless of the fact that it was annoying to others, more importantly it was bad for the kids. My wife and I went to Las Vegas last month for our anniversary (our son stayed at his grandparents), but I couldn’t believe how many people were carting toddlers around the Strip at 2am, or through the smoky casinos full of drunk people.

    OK, sorry for the off topic rant. I’ll jump off my soapbox now!

  9. I’ll say it again. It just makes most sense to sell music and rent the videos through the iTunes Store. That is what people have done for the longest time – buy CD’s at a record store and rent your videos from the video store.

  10. I agree with the quality argument. I’m all for Apple’s model and support the iTMS as much as possible (with music downloads) but poor quality has kept me from buying TV shows.

    I’ve spent thousands on an HDTV and HD satellite subscription… I’ll be damned if I’m going to be watching VHS-quality video on my sweet HD rig, and I seriously doubt I’m alone.

    Apple should at least give users the choice between cheap and “iPodded” (read: low-res) and higher-cost but high-res video.

    Cheers,
    adam

    MW “went”: “Apple’s chance to sell me more video went out the window the first time I watched an iTunes movie on my TV.”

  11. Apple will probably debut movies on iTunes for iPod consumption first which will therefore be low res.

    However as bandwidth and technology improve there will be an opportunity to sell movies at HD quality. When that will happen I’m not too sure.

  12. Renting – The big divide…

    Music purchasing is one thing, movies are another.

    Steve understands, and everyone for that matte should understand, music is listened too today, tomorrow and in 20 years from now. Purchasing makes sense, and it’s afordable.

    Movies are different than music. The majority of people watch a movie once, as the bulk of movies are average to sub-average and do not deserve more viewing time than that. Secondly, our society does not have time to view movies over and over again.

    Renting is huge, and a rental market (IMHO) should be the number one focus for Apple, and I am not so sure that is the case… A movie should be able to be rented for a reasonable price ($2.99) and then self-delete after five days or so. Of course, pirating, DRM stripping is the big fear from Hollywood, which is just ignorant when you think about that consern at any quazi-deep level…

    Lastly, resolution should be a fairly bid deal. Will anyone go for video less than DVD quality? Doubtful, so will this new movie service provide two resolution indepenant versions? One for a handheld and one for TV playback? Or will the handheld get that high resolution a screen to suffice for both mediums?…

    Personally, I would like to see HD downloads, but alas, that will come at a later date, once stnd. def is milked to it’s last…

    Seems like Blockbuster still has it’s rule with my renting until Apple can deliver piggie-back resolutions (or choice of resolutions with tiered pricing for them), and deliver rentals…

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