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Apple Looking to iTunes Movie Rentals
Sunday, June 10th, 2007 at 4:00 PM - by Jeff Gamet
Apple may finally be looking to get into the movie rental business with the iTunes Store. It appears the Mac and iPod maker has been quietly working on building its own Video On Demand service, and thanks to the iPod and Apple TV, it may have a leg up on other online video rental services, according to the Financial Times.
The online movie rental services from from companies like Amazon, Microsoft, and MovieLink all offer computer-based download systems that are often seen as cumbersome and difficult to use. The Apple TV home media appliance, however, offers a friendly interface, and could give consumers an easy way to download movies without using their computer.
"VOD gives the Apple TV box a lot more utility," noted senior Hollywood studio executive. "Right now its just a way to move stuff from iTunes to your TV but it will end up becoming a way to directly order a movie to your TV."
An easy to use movie download service from Apple could also spell trouble for retail movie rental chains like Blockbuster and potentially even Netflix. Customers could avoid lines at rental stores, the possibility that the movie they want to watch isnt available, and scratched or damaged discs.
Movie studios have another incentive for Apple to launch a rental service: profit. DVD rentals earn studios about US$1.20 per $4 rental. In comparison, a $4 video on demand rental will earn the studios about $2.50 - a substantial increase over brick-and-mortar rentals.
If Apple plays its cards right, Apple TV could be the catalyst that makes VOD into a blockbuster business, and the iTunes Store is the logical avenue to make that happen.
Jonathan Weitz, a principal with the media consulting firm IBB Consulting, commented "[iTunes] started its life as a way to get people to buy - and keep – their iPods. Now [Apple] knows theres also this vast market in the living room. iTunes and VOD can get them into the living room in a much bigger way."
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