Sources claim that Apple is close to finalizing deals with at least four of the five major Hollywood studios to allow both movie rentals and sales via iTunes, reports BusinessWeek.
The news comes only a week after the widely reported rumor that Steve Jobs will announce a new iTunes movie rental agreement with 20th Century Fox at next week's MacWorld Expo. Now, similar deals with studios like Warner Bros., Paramount Pictures, Sony, MGM, Lionsgate and Disney seem to be imminent. And while all the details might not be hammered out in time for a MacWorld mention, the fact that Apple is finally close to appeasing the notoriously nervous Hollywood studios is huge news.
In the past, the Cupertino company has had considerable difficulty replicating the success it's had in the digital music business to iTunes movie downloads. Currently, Walt Disney is the only studio selling its new releases through the online store. Paramount, Metro-Goldwyn-Mayer and Lionsgate do offer a handful of films through the store, but only their older titles. Analysts attribute this dearth of content to the fact that Hollywood studios have typically resisted the idea of uniform pricing structures, which Apple favors for its iTunes store. As Blackfriars' Carl Howe notes, they've also tend to be "religious" about DRM and protecting digital content.
As part of the rumored 20th Century Fox deal, the studio is supposed to start including a digital file protected by FairPlay -- Apple's own flavor of DRM -- on its future DVD releases. This will allow buyers to transfer film content from the disc to a computer and iPod without the need for additional ripping software. Fox tried this approach earlier with its own DRM late last year, yet it was discovered that the files were incompatible with Macs and iPods. It's unclear whether new studio deals would see a similar arrangement.
In the end, BusinessWeek suggests Apple may have made some significant concessions to push the bargaining foward. For one, the company could be paying closer to the $17 wholesale price the studios get from physical DVD sales by retailers. If true, it's also unclear how the company would handle that price hike (i.e., whether it would raise the price of movies in iTunes, as we previously reported, or take a loss and instead to try drive sales of Apple TV and video iPod players). Currently, new movies from Disney fall in at $14.99 on iTunes while older movies cost $9.99. Apple likely won't want to push prices much beyond that considering DVDs in retail are generally cheap.
Another unknown is how much studios will demand for rentals. Variety recently reported that Apple could end up charging somewhere between $2 and $5 for a movie rental that will expire only 24 hours after it's downloaded.
Yet if these rental agreements pan out, Apple does stand to gain a lot. Not only will it be giving iTunes users a feature that's been conspicuously absent from the online store, but also a much-needed second chance for faltering devices like company's Apple TV.
Interestingly, it seems that for now everyone but Universal is at the bargaining table, a fact that may have something to do with the recent tiff NBC (Universal's parent company) had with Apple over TV show pricing on iTunes.
[Via BusinessWeek]
