BusinessWeek: Apple faces challenges in bringing Hollywood into 21st century

Apple CEO Steve Jobs “plans to launch a movie rental service on iTunes for the first time. Apple is in furious negotiations with top studios to make their new releases available for the service, as well as for sale. BusinessWeek has learned that Apple is nearing deals with Warner Bros. and Paramount, and has already secured deals with Disney and 20th Century Fox,” Peter Burrows and Ronald Grover report for BusinessWeek. “Apple is also planning a major upgrade of the slow-selling Apple TV set-top box.”

MacDailyNews Take: “Slow-selling” compared to which other products in the category? Even with little or no marketing effort behind it, analysts have estimated 800,000 Apple TV units sold since its launch eleven months ago. Who else sold 800,00 units of a device promising to do similar tasks in the last eleven months? Nobody, that’s who.

Burrows and Grover continue, “But Jobs is having his troubles in Hollywood. While Apple persuaded the major record labels to sell every song on iTunes for 99 cents, the movie studios won’t agree to such standardized terms.”

“In the end, Apple will likely offer a respectable but not industry-leading selection of movies. New releases will cost $3.99 to rent, the sources say, similar to what Comcast charges,” Burrows and Grover report. “‘I have great admiration for Steve,” says Comcast CEO Brian Roberts. ‘But I also like cable’s position as the video leader. We offer more movies, TV shows, and video content than anyone else—and we intend to expand our position.'”

MacDailyNews Take: Are Comcast’s $3.99 rentals portable and able to be viewed on Macs, PCs, 150 million iPods and iPhones*, and nearly a million Apple TVs? If Apple makes this move, the value would clearly be in the portability of the content. Try taking your Comcast box and TV on your next plane flight.

Burrows and Grover continue, “Of course, Jobs has succeeded in the face of massive challenges in the past. With sales of Macs and iPods zooming, he can afford to take his time and work on the next knockout. One possibility is that Apple might add a tuner to its TV product later this year. That way, the device could handle the tasks of a cable box and provide a portal for almost any video need—from obscure clips on the Net to the evening news. ‘The day that happens, Apple TV sales will take off,’ says American Technology analyst Shaw Wu.”

Full article here.

*On September 5, 2007, during “The Beat Goes On” event, Apple announced that iPod had sold over 119 million units worldwide. 140-145 million iPods have likely have been sold to date, along with roughly 5 million iPhones. We hope to get a unit sales updates for both iPods and iPhones from Steve Jobs during his Macworld Expo keynote on Tuesday. Failing that, Apple will report Q1 08 quarterly results on January 22 which will give us a clearer picture of units sales for many Apple products.

25 Comments

  1. “Try taking your Comcast box and TV on your next plane flight.”

    Well, I hope the iTunes rental movie wil not have expired once you are on your flight.

    Perhaps the 24 hours viewing time should better begin when you start first watching, and not from downloading the movie.

  2. Hey MDN,

    you can quit trying to say that Apple is now or every will take over the TV world. It’s ok for Steve to play in this market without having to be projected as killing off everyone else. By the time he has explained how you can get a tv show or movie with a cosmetically superior box, all the rest of tv makers, cable, satellite, dvr, netflix, b’buster,etc., etc., will have done it too.

    In the end, Apple will be another brand in a very crowded market place. And, that’s ok.

  3. My cable has movies on demand, but the selection is very limited. Until the online video libraries are extensive enough that you can call up “The Beast with Five Fingers”, or other blasts from the past, this model will not reach its full potential. Don’t you wish that when you make a movie reference, and the person you are talking to has never seen the movie, that you say, “You’ve never seen Plan 9 from Outerspace???!!. Get over here right now and sit down.” Open up FrontRow, search on Outerspace, select Plan 9, and treat your guest to the worst movie ever made. Now that is when VOD will be here.

  4. MDN, I love ya, but you’re spinning too hard this time. By any objective measure AppleTV has been… well, not a failure, but mediocre by Apple standards.

    If Apple adds in the ability to play DivX/XviD movies, maybe I’ll buy one. Until then, I just don’t see the point.

    ——RM

  5. No way I’m ever paying $4 for a rental again. Two blocks away there’s a RedBox and a New Release kiosk giving me $1 a day rentals. I walk over, pick something up, watch it that day then walk right back over. It’s got Pirates at Worlds End or whatever other new movie I wanna see. I saw Bourne Ultimatum that way, for a buck. They don’t have the greatest selection, but these $1 rental things are seriously changing the market and lowering the perceived value of DVDs.

  6. Whoa whoa don’t mess yourself MDN…AppleTV IS slow-selling (as is everybody else). Next you’re going to defend the G4 Cube’s sales…Apple has NOT sold 150 million video-capable iPods and iPhones (not even close)…besides, I wouldn’t want to pay $4 to watch an action movie on a 3.5″ screen (A lot of people would only rent if they plan to watch on TV or computer screen)…Sometimes your Takes are just ridiculously over-the-top and self-serving when the story itself says enough.

  7. Cable might be the video leader now but that’s just a historical-technological accident. Once we’ve figured out a different delivery system we won’t have to put up with a business model that charges us for 187 channels of content we don’t want, and then charges us again for the channels we do want.

  8. Downloaded an Unbox video to my Tivo via Safari on my Mac last night for the first time in several weeks.

    Amazon’s viewing window has expanded from 24 hours to something like 168 — in other words, you have one full week to watch a rental before it expires. (Or at least I did on the particular movie I rented.) Not sure about the overall 30-day term on rentals — it may still be the same.

    Interesting that this change at Amazon Unbox comes on the eve of Macworld Expo and the rumored announcement of an iTunes movie rental program.

    One week of unlimited viewing over a 30-day period for 4 bucks seems like a reasonable set of numbers to me.

    Amazon Unbox works reasonably well, with an acceptable tradeoff between quality and convenience. But if Apple offers the same deal on digital rentals, the only thing keeping them from getting all my future business would be the depth of their catalog.

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