Apple in Video Rent Talks

Apple is in the later stages of negotiating an online rental service for feature-length movies on iTunes, according to at least one senior Hollywood executive. The service, which is currently slated for a fall release, would reportedly use a version of Apple's FairPlay copy protection to let customers rent movies for a full 30 days at $2.99 per title, automatically rendering the video file inert and preventing unauthorized copies while still allowing the file's transfer to at least one extra device, such as an iPhone.

The move is said to be a critical one for Apple. The electronics firm's roster of studios has grown significantly since the addition of full-length movies to its online store in fall 2006, but some studios are allegedly reluctant to sign on to the complete purchase model for fear of hurting their DVD sales. However, one of the commenting executives observed that the ramifications could be dramatic for rivals already offering online rentals, since Apple has previously turned down the business model.

It could "compete against cable companies and anyone else offering VOD into the home," the executive said.

Digital rentals have so far enjoyed modest success, with Microsoft's Xbox Live Video Marketplace and Amazon's Unbox highlighting the current options. None currently owns a majority stake.

Film industry executives, however, claimed that Apple could see major gains through rentals courtesy of its Apple TV media hub. The device, which is reportedly suffering from low sales in its current form, could be used to at least synchronize rented movies from home computers but could also be used to download the movies directly. This could permanently change the way users experience the device and give it "a lot more utility," said one company leader.

IBB Consulting expert Jonathan Weitz agrees, noting that Apple would latch on to a model for watching video which is currently more popular than direct purchases and is poised to grow larger still as digital rentals take off.

"Consumers don’t want to own media – they want to consume it," says Weitz.

By Electronista Staff

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