Analyst sees Apple entering rental space for video games, movies

Apple Store“Apple on Wednesday again showed its unparalleled ability to think and execute the unconventional, says American Technology Analyst Shaw Wu, who in a note to clients argued that earnings per share (EPS) may no longer be the best way to value the consumer electronics maker,” Prince McLean reports for AppleInsider.

McLean reports, “Wu, who maintains a $145 price target on shares of the Cupertino-based company, says there were “three notable surprises” in the firm’s March quarter report. Specifically, its ability to capitalize in a favorable component pricing environment, its strong Mac shipments despite evidence of a pause ahead of Leopard, and its grander plans with iPhone and Apple TV.”

“While the new accounting allows Apple to state only 1/8 of a [iPhone and Apple TV] hardware sale each quarter, over the longer-term, Wu believes it will improve the company’s linearity and his ability to predict future revenue streams. It may also be a sign of future initiatives on the subscription front,” McLean reports. “‘We believe Apple is in the midst of building a more serious effort in the subscription business where it could enter the ‘rental’ space with video games and music, TV, and movie content,’ he told clients. ‘We would not be surprised to see Apple compete with the likes of Netflix and Blockbuster in a bigger way.'”

Full article here.

19 Comments

  1. VIDEO GAMES?

    There is no way Apple is going to RENT DVD’s of Xbox 360 and PS3 or Wii games. where in the WORLD is this guy getting this from???

    Movie rentals…yeah thats possible cause u can do that electronicly, but not console games.

    and renting video games for the Mac platform? not happening either..

  2. Re: John Gee
    “I don’t need to own movies. seriously. Anyone else?”

    Some of them yes. If I find a movie that I really enjoy I go ahead and buy it because I like to watch it again and again. Now if they had a subscription to watch any movie in the database for a set price a month including new releases I would definetly do it. But I still would own some of them like the classics.

  3. I hear ya, Movie Man.

    l bought Apollo 13, some others. My wife likes to buy all movies she loves. Dang, so far she wins (again)

    The question is … $1.99 rental…or more for AppleTV. Even if it’s the same as in the store for rental, it’s still a good idea. (but if it works like NetFlix that’s really interesting)

  4. What about my music video?
    I’d probably go with own, for that one. In my mind, it’s different from a movie, in that, I’d watch it more often. A movie has a plot and such to follow, and music videos are more about the music, so it doesn’t “ruin” it to watch it more often (like listening to the song more often than you’d watch a movie).

  5. Re: John Gee

    Wives always win. I just can not say no to mine for some reason.

    Like you said if it is like netflix, a flat rate for a month then I am in. If it is $1.99 for each download then I may use it on occasion. I would be more likely to use it if I paid $12 a month and got to download one or two at a time as many as I could a month. I typically watch about 4 or 5 a month now but when I had netflix I was up to 3 a week.

  6. No desire to OWN movies and other video. Especially in digital download form.

    If Apple can provide a subscription service for their movies that is the same or less a month than a comparable Netflix DVD rental account, I will buy an Apple TV the next day.

    Until then, I have no interest.

  7. iTunes coupled with Apple TV will become the living-room media center, completely replacing the recevier, and various components.

    1. CD player – already dead with iTunes
    2. DVD player – Close, but not quite. Apple will soon deliver HD content on iTunes, along with movie rental abilities. Then the DVD player and HD DVD players will all be DOA.
    3. Apple TV will allow selections of movies and TV shows from directly in the living-room. No longer is it iPod like in one-way communication, but can flow purchased content back to the iTunes libary.
    4. The Audio receiver also dies in this model. iTunes delivers all the content (audio and video) and who listens to radio in their living-room anymore? No amp required because Apple will – in 2008 – deliver a powered Accustimass-like speaker system, or plug Apple TV into any powered speaker system and the solution is complete.
    5. Lastly, games. Apple will deliver their own gaming platform that streams through Apple TV from iTunes on a PC or Mac. So no, Apple will not be offering PSIII or xBox games – ever.

  8. ‘new accounting’ reminds me of new math! LOL!

    Glad that Apple has found an acceptable way to provide new features on its hardware without the stupidity of those tiny payments to satisfy a stupid law.

    The other neat thing about this accounting manoeuvre is the way you’ll see their bottom line growing incrementally quarter by quarter as more and more of their new stuff gets bought. Even 1/8th of the sales of TV and iPhone will give an immense lift to the next quarter’s report. Then you’ll be able to watch that graph push to the sky as more and more people buy in.

    Exciting times after the scare of the ’90s.!

  9. Whatever AppleTV sales are now, they’ll really increase once you’re able to rent movies through your AppleTV while lying naked on the sofa.

    And I’d like to be able to watch porn vids that are posted on Usenet through the AppleTV. That’s another way to increase AppleTV sales.

  10. MUSIC: I think Apple has gotten it right so far. I like to buy, not subscribe to, my music. However, unlike MDN, I do not contend that subscription services are “against human nature” (comments from previous articles. Many have shown an interest in subscription services. But Jobs recent comments mean that its not likely to happen.

    MOVIES: I personally have never understood why one would buy a movie. I watch it once and I’m done. The huge exception of couse was movies for my young children. They would watch the same movie over and over again. However, it is clear from the many comments that I’ve read before that many others do enjoy owning their movies. Since Itunes is already set up for sale, I can only hope that Jobs decides to add a rental/subscription service to Itunes. Depending on their pricing, I think they effectively bankrupt Netflix in no time.

    GAMES: @emax said: “There is no way Apple is going to RENT DVD’s of Xbox 360 and PS3 or Wii games. where in the WORLD is this guy getting this from???” The article never said Apple would rent those games. I think that many can see how the Apple TV can be used to port games to ones TV. They wouldn’t be the same as the console games, but they could still become very addictive, cheap alternatives that would carve out a new niche.

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