Apple Announces iTunes Movie Rentals

January 15, 2008

Apple announced that as of last week, the iTunes Store has sold over 4 billion songs. A new single-day record was set this past Christmas Day (December 25, 2007) with 20 million songs sold in 24 hours.

iTunes Movie Rentals
Touchstone, Mirimax, MGM, Lionsgate, Newline, Fox, WB, Disney, Paramount, Universal & Sony are all on board.
Over 1000 movies - available 30 days after the DVD release of the film.
Watch anywhere - Macs, PCs, all current iPods and iPhone.
Watch instantly - 30 second delay with modern broadband
Rules - 30 days to start watching, 24 hours to complete once started
Pricing - $2.99, new releases $3.99

The new rental service launches in the U.S. today. International will launch later this year. Software updates for iPods and iTunes forthcoming.

SAN FRANCISCO — Steven P. Jobs is rebooting Apple’s digital movie effort and putting the company squarely in the middle of an intensifying industry battle to download movies and Internet content to high-definition televisions.

On Tuesday at Macworld Expo, an annual trade show, Mr. Jobs announced that the company is adding movie rentals from all the major Hollywood studios to its iTunes download service. Mr. Jobs said that more than 1,000 regular definition and about 100 high-definition movies would be available by the end of February.

He also unveiled a sequel to Apple’s year-old, unsuccessful AppleTV — a set-top box designed to play those movies on a high-definition television set. The older version of AppleTV, introduced last year, required a computer connection. The newer version connects directly to the Internet and allows consumers to select movies and TV shows to watch directly from their TVs.

“We’ve all missed. No one has succeeded yet,” Mr. Jobs said of the industrywide effort to marry the Internet and the television. “We learned that what people really wanted was about movies, movies, movies. And we weren’t delivering that. So we’re back.”

The announcements come a week after the Consumer Electronics Show in Las Vegas, where many of Apple’s consumer electronics industry competitors like Samsung, Panasonic and Sharp introduced their own efforts to better integrate digital content and televisions. Other companies like Microsoft, Netflix and a set-top box start-up, Vudu, are trying to insinuate themselves into the digital movie business. They believe the Internet presents a chance to deliver a new generation of content to consumers.

Anxious to defend themselves from these rivals, cable and satellite companies are expanding their own on-demand offerings. Comcast, one of the nation’s largest cable companies, said last week it would have 6,000 movies available on demand by next year, with half of those in high-definition.

Cable and satellite companies may be in the best position to deliver on the future marriage of the Web and the television, since their set-top boxes already sit in millions of homes. So far, no company has given consumers an extensive library to choose from or provided a convenient system, as Apple did with music on iTunes. Indeed, consumers are not finding current methods of movie rental onerous.

Apple’s offering is not a radical departure from what its competitors offer. It will charge $3.99 for new releases, $4.99 for new releases in high-definition, and $2.99 for older movies. Consumers can store the movie for 30 days, but can watch the movie only during a single 24-hour period. The new releases will not be available on AppleTV until 30 days after they have been made available for sale as DVDs. Other rental services face a similar 30-day delay.

The second version of AppleTV, priced at $229, or $70 less than the first version, may give the company some advantages. It is the smallest, most portable of the set-top box options and has the benefit of working with the same digital format as the millions of video iPods that Apple has sold.

Richard Doherty, research director of Envisioneering, a technology assessment firm, said that AppleTV was the best solution to date for getting movie downloads. But he said consumers ultimately may favor a way to get digital content onto their televisions that does not involve buying or installing another box.

“No one we’ve ever interviewed wants a set-top box,” Mr. Doherty said.

He believes that Apple, hoping to compete with manufacturers that have integrated Internet access technology into televisions, will eventually introduce a TV set of its own. “We’re fairly sure they’ve been working on that, and it might be a summer announcement,” Mr. Doherty said.

Tom Lesinski, president of Paramount Pictures Digital Entertainment, said the Apple movie service would be a significant litmus test for the idea of downloading movies on the television. “All the barriers that have existed with other solutions pretty much go away now,” he said.

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