BusinessWeek: Apple agreement with movie studios for iTunes Store unlikely any time soon

“Water coolers from Cupertino to Hollywood are abuzz over the prospect that Apple Computer is plotting a frontal assault on the movie business. Indeed, Apple has held serious negotiations with movie studios about adding a movies section to its famous iTunes Music Store, sources confirm,” Peter Burrows and Ron Grover report for BusinessWeek.

“Apple has hoped to get the store up and running within weeks, Hollywood sources say. But the deal isn’t yet done—and there’s a chance it won’t be any time soon,” Burrows and Grover report. “That’s because Apple and studios remain at loggerheads on a range of issues, from how much movie downloads should cost, to the degree of piracy protections they should carry. ‘This will take months and months to figure it out,’ says one source involved in the talks. ‘It may even be a 2007 kind of thing.'”

“Many analysts believe Apple’s big play for Tinseltown will arrive only should it come out with a new kind of consumer device designed specifically with movies in mind, rather than the iPod and its tiny screen. Little wonder both sides may be content to play a waiting game. Apple Chief Executive Steve Jobs seems determined to approach the movie business with a similar formula to the one that enabled Apple to create a $1 billion-a-year market for legal music sales. The recipe includes a low, uniform 99-cent per-song price,” Burrows and Grover report.

“To the studios, Apple’s version of “consumer-friendly” looks more than a bit self-serving—and unnecessarily tough on them. Jobs is said to want to sell movies at a flat $9.99 apiece. That’s far below the $19.99 that studios want for downloads of their newer films and major hits, and that they now get for selling DVDs through Wal-Mart and other retailers,” Burrows and Grover report. ‘No doubt Jobs does hold a wild card if he wants to get iTunes movie sales started: He could convince fellow Disney directors to take the first step by making some of its movies—say, the new Pixar (PIXR) film Cars—available for his $9.99 price. If sales take off, other studios may follow suit—just as they did soon after Disney became the first to make some of its TV shows available on iTunes.”

Much more in the full article here.

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Related articles:
Apple prepares debut of full-length feature films via iTunes Store in time for 2006 holiday season – June 20, 2006
Report: Movie studios flatly reject Apples’ proposed $9.99 pricing for feature films via iTunes – June 19, 2006
Report: Apple in negotiations with movie studios; $9.99 feature films coming to iTunes soon? – June 19, 2006

25 Comments

  1. ‘Jim – the independent voter’ wrote:
    “Maybe his steveness can pull a rabit outta the hat.”

    More likely, Steve would have to pull the movie execs heads out of their a**es.

    ” width=”19″ height=”19″ alt=”LOL” style=”border:0;” />

  2. I’m going to tell you why this isn’t going to happen.

    1: Hollywood wants a total lockdown of the content so they can charge as much as possible to pay the high cost of developing movies. This is why they are going the cable HDCP to HD HDCP TV route.

    2: They have learned that content cannot be protected on computers and even Steve Jobs admits DRM is rather hard to make 100% reliable.

    3: Hollywood doesn’t want to undercut themselves and their cable company buddies by satisfying the urge for new movies on the cheap with a $10 iTMS download. When they can get people to pony up $20 by watching it on cable.

    4: The “excuse” that Hollywood wants control over prices is BS, they will then charge $25 for a low quality iTMS download and then cable companies will sell it for $20.

    So there really is no solution for movies on the iTMS, in fact I would be surprised if Hollywood will allow BlueRay and HD-DVD’s to play on computers having learned the lesson from the Macrovision crack.

    Hollywood wants that one channel, cable box for maximum control over content. No recording, no DVD burning, no nothing. Sure you can time shift the movie for the day, but after that it’s automatically erased from the cablebox hard drive.

    If you want to permantly record HD/HDCP to your Mac you’ll need a few things

    http://www.anandtech.com/mac/showdoc.aspx?i=2349&p=3

    http://www.digitalconnection.com/products/video/dcda1.asp

  3. “Many analysts believe Apple’s big play for Tinseltown will arrive only should it come out with a new kind of consumer device designed specifically with movies in mind, rather than the iPod and its tiny screen.”

    Funny, in my living room, my iPod has a 61″ screen. In my bedroom it has a 32″ screen. On my boat it has a 15″ screen. The beach house has a 30″ screen. These so called analysts need to get better monitors to hook their iPods up to.

  4. hollywood are idiots, thats all, they dont know if theyre coming or going, theyre stuck in the past, they could have stopped piracy on dvds but they were too cheapskate. if they price competatively theyre make money. if they do download and ciname releases at the same time, thyre make money. if they fanny about not making any proper deals and dont make their minds up, it leads to more piracy and loss of profits, exactly what they will do.

  5. Studio’s are unlikely to play to Steve’s tune this go-around. However, Steve’s rabit is Disney.

    Should Steve get Disney onboard at $9.99 for stnd def, and $14.99 for HD quality (using the mysteriously defunct Pixlet technology), coupled with launching a truly great movie iPod, which is great to connect for TV playback as well, the rest of the studio’s will fall in line.

    The begs the question:
    How will the iPod device work with two resolution versions of movies?

    Answer:
    stnd def (DVD quality) movies will be at the iPod video’s resolution of 720 x xxx. It will playback to a TV at the same resolution.
    HD (1080i or Pixlet trickery with lower res) will downsample for iPod video playback and stdn. TV’s, and it will playback at it’s native resolution when connected to HD TV’s. This will push more buyers towards purchasing the $14.99 version of the movies, which Studio’s will eventaully be foreced to live with.

    As for me, where is renting in this equation? I use to purchase titles when I was younger, but quickly figured out it was an extremely expensive and what was the real value to buying?… I really didn’t want to watch the same movie, over and over, but watch new titles instead.

    If Apple can get a $2.99 five-day rental and self-delete solution going, I believe that would be larger for Apple than a purchase model… Studio’s will of course resist, so I do not plan on seeing this any time soon.

  6. Movielink and CinemaNow have movie rentals. $4.99 or as low as $2.99 depending on title.

    While these lame places have rentals, it may be a different story with Apple. The studio’s goal is to shove purchasing movies down our throats, rather than rentals…

  7. I can rent a DVD for 5 bucks. There’s Macthe Ripper and DVD2one. A DVD blanc costs less than a dollar. Now go figure. Anything more than 9,99 will not sell.
    After all, the studios will have no distribution costs, no write offs for stinkers that don’t sell well.

  8. For movies I would prefer a subscription service. Similar to a netflix type of deal where you can keep two movies downloaded on your computer at all times for a $19.99 monthly fee. Once you delelte the file, you can download another.

    Of course we would need a video capable airport express so that the movie could be streamed to the living room tv.

  9. Well old Stevie has some bargining power, after all iTunes is installed on zillions of Mac’s and PC’s around the world and pirates are going to pirate anyway.

    The advantage of iTunes is it gets to people’s eyeballs first, one has to learn how to be a successful pirate and it’s risky.

    Of course a copy of Azureus and a visit to the PirateBay is really all one needs to be a pirate. ” width=”19″ height=”19″ alt=”smile” style=”border:0;” />

  10. I’d love to purchase movies through iTunes, but the Movie Industry is just stupid if they think I’m going to pay $19.99 for a digital download of a movie. I rarely even pay $19.99 for an actual DVD and I own 100s of DVDs (well over 400), and only Spiderman 2, Harry Potter, and Bourne Supremacy were enticing enough for me to pay first day release prices.

    Practically everything else, I wait for lowered pricing, Amazon discounts, and or my local video store to sell their excess copies for $5-$10.

  11. The movie studios are making the same mistake that many of the TV Networks did at first – they’re looking at this as competition to their established model, but in reality, it’s an opportunity for a brand new model. Networks were afraid that people would stop watching shows on TV and that advertisers would pull their money out. What actually happened was that the numbers for many shows improved after people started watching on their iPods.

    The same could happen with movies if done correctly. I wouldn’t mind if they offered DVD quality at near-DVD prices (less because there’s no manufacturing, printing, packaging, or shipping cost), but then also offered lower res versions for portable devices. This could turn out to be a great business opportunity if they’d get with the times and stop being so greedy.

  12. I really don’t get the whole thing. I mean you really have to have no life to be SOOOO involved in movie watching, buying or whatever. There hasn’t been a decent movie released in what….20 yrs?? Who goes to the theater that much anymore. Who even rents that many movies for that matter either?

    Now on top of that, if you think I’m going to download some crap movie ALL DAY, and wind up a resolution that makes 1950’s TV look good, and then pay $20 for it, you must be on crack. Only in the computer(maybe even cell phone) industry, will someone pay more, have to put up with more aggrevation, and get far less in return. This is progress??

    Go to Block Buster, rent the damn crap movie and watch it. End of story. How simple is that? I mean all this that you have to go through to watch a movie that’s gonna suck with horrible resolution??? I’m waiting for the punch line….. it has to be here somewhere.

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