Steve Jobs has reportedly signed up News Corp. for his forthcoming movie rental service. And of course, getting Disney on board isn’t a problem for Jobs, who’s the single largest shareholder in the Mouse House. Now Businessweek reports that Apple is about to get the rest of the big movie studios inked, just in time for his Macworld announcement next week.
Sources say Warner Bros. and Paramount are mulling agreements that would allow both sales and rentals. Fox has already agreed to offer both, but only the rental deal is set to be announced Jan. 15; the two sides are working out final details on the sales arrangement. Lionsgate, meanwhile, is considering a deal to let Apple also offer its films for rental. Even Sony (SNE), a longtime Apple rival in consumer electronics, is said to be contemplating a deal to sell its movies through iTunes. Among the major studios, only Universal, whose parent company NBC (GE) has yanked its TV shows from iTunes over a pricing dispute, is not discussing a movie deal with Apple, according to sources.
If Jobs can pull this off, he’s achieved a real coup: Unlike the music business in 2003, Hollywood is still in a position of relative strength — the conventional movie business is at least holding steady, and there are lots of well-financed players begging for a piece of the digital download business.
On top of that, there’s some very sticky channel conflict to work around: The studios won’t do deals with Apple that have the potential of angering the likes of Wal-Mart (WMT), Best Buy (BBY) and Target (TGT), who sell the bulk of the industry’s DVDs. Same thing, to a slightly lesser extent, with Blockbuster (BBI) and Netflix (NFLX).
How significant are the challenges? Consider Apple’s demand to sell its movies “day-and-date” — the same day they come out in video stores; studios traditionally wait 30 days before they offer the films anywhere else.
Fox appears to have backed down from that 30-day requirement, but other studios are still studying the issue. Warner Bros. is said to be contemplating Apple’s demand. The studio already allows some movies to be offered day and date with DVD release through Microsoft’s (MSFT) Xbox video service. But Disney, of which Jobs is the biggest single shareholder and which is the only studio to allow new movies to be sold through iTunes, is said to have balked at allowing day and date rentals of its movies.
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