BusinessWeek: iTunes movie rentals could reinvigorate Apple TV

“In much the same way it upended online distribution of music, Apple may now be poised to redefine the way movies are rented online. According to published reports, Apple and Fox plan to bring movie rentals to Apple’s popular iTunes Store, and through that to its family of iPod media players and the iPhone. The two companies are said to have concluded an agreement that will have Fox movies available for limited-time viewing via iTunes as they are released on DVD,” Arik Hesseldahl reports for BusinessWeek.

Apple competitors’ offerings are “hard to use and their movies don’t work with iPods, among the most popular digital entertainment devices on the market, says JupiterResearch analyst Michael Gartenberg. ‘Apple will be bringing to the table its famous ease-of-use and its popular player,’ Gartenberg says. ‘For all intents and purposes, if something doesn’t work with the iPhone or the iPod, it doesn’t exist.’ Some of the services aren’t compatible with Apple’s Macintosh computers, either,” Hesseldahl reports.

“Apple Chief Executive Steve Jobs may announce the rental plan on Jan. 15, during his keynote address at the Macworld Expo in San Francisco… As much as the Apple-Fox deal could shake up online film rental, it’s also likely to breathe new life into Apple TV, a digital media also-ran,” Hesseldahl reports. “…Apple hasn’t disclosed the number of Apple TV devices sold, but market research firm iSuppli has estimated the number at less than a million units. The number could rise quickly once movies are available for rent from iTunes.”

MacDailyNews Take: Let’s say 900,000 Apple TV units sold since March 21, 2007. That’s an average of 100,000 units per month. At $350 each (and that’s probably a bit low as most Apple TV buyers would opt for the larger 160GB hard drive model at $399 vs. the 40GB $299 model), that’s $35 million per month from Apple TV. $315 million in 9 months. Can we please have an “also-ran” like that? And how have competitors done with products that claim to do similar things as Apple TV? “Much worse” would be an excellent guess. Apple TV denigrators seem to forget that when and if Apple turns on movie and TV show rentals (and they include Apple TV, which they almost certainly would), there will be 1 million units out there owned by customers who are thirsting for content. We are poised and ready to rent. If the rumors are true, iTunes movie and TV show rentals are going to be much bigger and growth will happen much faster than many seem to realize. Watch and see – literally.

Hesseldahl continues, “Apple TV currently has a set of options related to the iTunes Store that for now do nothing. Analyst Gene Munster of Piper Jaffray (PJC) expects that soon consumers with Apple TV boxes will be able to rent movies from their living room by using iTunes via the TV… Reports say Apple will allow future Fox DVD releases to be ‘ripped’ to iTunes collections in much the same way that music can be ripped from a CD… Earlier rumors had said that movies would be playable [on Macs, iPods, iPhones, Apple TVs, anything Apple comes up with in the future, and Windows PCs] for 30 days for a price of $2.99.”

Full article here.

34 Comments

  1. I hope that the quality of the rentals will be a higher resolution to take advantage of all the 720p/1080i/1080p sets being purchased. I think that will be an important catalyst for success. Even though people don’t really understand what HD is, providing it as an option makes people feel it’s better and worth it.

  2. It is all so damned obvious that Apple TV has been awaiting content. It is a platform that Apple just had to place into the market, so that it was ready to go once the needed elements were in place. And being based on OS X, its capabilities are upgradeable by synching.

    But the almost unanimously stupid analysts and pundits just couldn’t containing their snarky cynical mouths — iFail, iBust, blah, blah … blah. Massive portions of crow await serving to the anti Apple TV FUD spewers.

  3. @ LinuxGuyAndMacProdigalSon

    Come on, you should know by now that if a product isn’t the final, perfectly realized ideal of everyone in the world the day it’s released, then no analyst will have the vision to understand what it’s really about. Name one analyst that saw the iPod coming.

    If you Can – Do.
    If you can’t think, imagine, create, improve, or execute – Analyze.

  4. I think the movie rentals will start out Standard Def wide screen and as things progress and Apple shows that there is a good market they’ll start introducing Hi Def 720p content (about April) and will then introduce a 1080p content option next year.

  5. Okay, you’re right, I just read the BW article, and he did refer to AppleTV as an “also-ran” after belittling all the other online download efforts from others, as well. Basically, the whole online movie effort is in its nascent stage so far. That’s true.

  6. The opinions about AppleTV that reflect poorly on its condition are simply a matter of people having such lofty expectations for anything Apple does. If it’s not a rocket to space then it’s a complete failure as far as they are concerned.

    People need to realize that products take time to mature expecially when introduced into a system like Apple TV and rentals etc will eventually be. It’s not going to always be 100% full throttle at launch.

    I’m betting that the AppleTV detractors will be sitting along side the laura Goldman quotes by the end of ’08.

  7. ok, thats all and good for America and countries that have cheap internet.

    In australia, where I pay $70 AUD for 12Gigabytes a month…

    Apple needs to have particular deals with ISPs, to set up servers that don’t count the movies bought from iTunes as part of the download. And that way, that would really kill bit-torrent.

  8. Apple TV is only a failure in comparison to the iPod, which more than being a success is one of the greatest successes of all time. As MDN said, I think any company would be happy with sales of their product matching that of the Apple TV – especially when you know Apple will be making a tidy profit of each device – unlike some companies.

  9. “The opinions about AppleTV that reflect poorly on its condition are simply a matter of people having such lofty expectations for anything Apple does.”

    False. All the harsh criticism for AppleTV is based on the fact that people want SOMETHING to call a failure when it comes to Apple. It’s basic human jealousy.

  10. Hmmm… let’s see, Netflix for $17.99 per month for unlimited movie rentals, or an AppleTV for $399 plus $5 per each movie I want to rent. Not to mention that the movie EXPIRES after a certain number of days. No thanks, I’ll stick with Netflix.

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