updated 09:25 pm EDT, Thu July 8, 2010
Apple focusing on cheap TV rentals for Apple TV
A centerpiece of the next-generation Apple TV may involve cheap, streaming-only TV rentals, a rumor asserted tonight. Multiple sources understand that Apple would supplement its $2 and $3 episode purchases with 99 cent rentals that would be delivered only through an on-demand stream. As with movies when they reached iTunes, customers would have 30 days to start watching the rental but only 24 hours to finish watching once playback has begun.
The price drop, NewTeeVee noted, would have the advantages of boosting traffic and cutting Apple's own costs. Halving the effective cost of viewing a show would theoretically encourage higher volume. By leaving the TV shows on the servers, however, Apple could cut the Apple TV's storage down to its rumored 16GB of storage and drop the price of the box to $99, spurring on more sales and again making up for money that would have been generated through purchases.
A switch to cheaper but streamed video would come in sync with reports of possible iTunes music streaming and could mark a broad shift to remote access for much of Apple's previously download-only media. For TV, streaming could be critical as Apple's episode sales have likely been dampened both by the surge in web-based viewing and the rise of subscriptions as an alternative. Netflix is one of the most popular and has contributed to the downfall of Blockbuster, but Hulu's new Hulu Plus are more threatening still as they promise many current shows from popular devices, including the iPad.
Apple's economics for the as yet unconfirmed deal may revolve around cost. At 99 cents per show rental, an Apple TV customer could keep up with two TV series' episodes for an entire month while paying $8, not the $10 of Hulu Plus or Netflix. Frequent viewers would suffer, though, as keeping up with three or more programs would make iTunes the most expensive option.