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Summary:

At the recent All Things D conference, Steve Jobs, chief executive officer of Apple in an uncharacteristic display of modesty dubbed Apple TV, as a “hobby” that the company was trying to figure out. He, then proceeded to outline his grand vision of turning the Apple […]

At the recent All Things D conference, Steve Jobs, chief executive officer of Apple in an uncharacteristic display of modesty dubbed Apple TV, as a “hobby” that the company was trying to figure out. He, then proceeded to outline his grand vision of turning the Apple TV into the DVD player of the Internet age.

Well if you believe what you read in this morning’s Wall Street Journal and The Financial Times, then the company has taken first step towards that goal. The company is said to be in talks with major Hollywood studios to figure out a way to rent full length feature films to Apple TV viewers.

With Apple willing to give a bigger cut to the studios, which are frantically and desperately looking to shore up their shrinking DVD-related revenues, it won’t be long before the majors sign-up for the new offering.

At $2.99 a pop, the movies will be available for rental for about 30 days, and the service could launch sometime in Autumn 2007, according to the two financial dailies. Apple currently offers movie downloads from studios such as Lions Gate Entertainment, MGM and Disney.

This download-rental move will put Apple in direct conflict with dozens of competitors, including the cable and phone companies that are betting big on the video-on-demand as an engine of growth. The strategy is typical of Apple: it lets the market reach a point of confusion, and then starts offering a service that emphasizes ease of use and elegant out of the box experience.

It worked in the case of iPod, and if the initial hype around iPhone is any indication, then it might work when it comes to multimedia computers formerly known as cell phones. From a limited two-week experience with AppleTV, an encore isn’t that difficult to imagine.

Still, it won’t happen overnight – unlike the digital music player market, most of us are fairly happy with our DVD players, and snail mail still remains the fattest pipe around. The bandwidth constraints, at least in the US, home market for the US are not going to go away anytime soon. The so-called fast connections are fast, when compared to say what was on tap two years ago. The infrastructure challenges of such a service and the costs associated with it are another issue Apple will have to tackle.

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  1. I think it is better to integrate TIVO function as well. But with APPLE rolling out a series of electronic products that are targeting a more general user, APPLE is slowly evolving to become the next SONY.

    How about a combination of iPOD + APPLE TV + iPhone => the ultimate gadget of the century? Just a thought…

  2. Sounds like Apple is chasing the Xbox 360 Marketplace wave. MS must didn’t make a big mistake with its rental program at all and the question should be is this the new media rights movement. Do we not care about owning the material and will we be stuck in this monetary structure of constant throughput from the internet rather than archive storing.

    Guess this all will be very interesting when we start talking about theater movies becoming available for the compatible device users at the same time.

  3. Simon Leyland Monday, June 11, 2007

    downloading and renting movies would be great especially when integrated into a service such as http://www.matchmine.com/. After using matchmine you understand how many movies you haven’t seen. To buy the dvd is too cost prohibitve, i’d like to download for $3 and if I like buy the dvd.

  4. Watching a movie a second time ranks on a par with watching a movie over more than one viewing period. I prefer to watch a movie in its entirety – maybe a pause for a bathroom break. My movie rentals have been from a local store for a 3-to-5-day period, depending on how many movies are rented at a time. Watching a movie on a VERY small screen and/or over a period of interrupted time does not hold any attraction. How can so many people be sucked in by this type of rental arrangement? Is it ADHD?

  5. Content providers are so out of touch, you really have to wonder what it will take to get them into the 21st Century.

    Example from last night: we’ve been following the most recent This Old House project in Austin, TX. The finale was a hoot – and I wished my father-in-law hadn’t headed back out with his 5th-wheeler, missing the show. So, I went looking for some means of downloading or recording or buying a DVD or anything. 1st place I looked was iTunes.

    Nothing, nada, nuttin’ honey. Obviously N/A to Apple.

    We often watch series recorded on DirecTV’s HR20 – or downloaded from iTunes and played back via Apple TV. Content providers still think the means of enjoying their wares is in a theater, watching live TV or – a year later – buying a DVD, sometimes.

    Video On Demand means the consumer is the one with the “demand”, folks.

  6. John Burkey Monday, June 11, 2007

    Apple will wipe the floor with XBox360, an expensive game machine that does not just fit on the stereo stack like the AppleTV. The AppleTV is cheap enough its in the impulse range, a “why not” purchase. Its very easy to use, and personally I even use it as a better DVD player- once you rip a DVD, you get instant on for the movies, with no menus if you dont want them. When the kid is crying and once his bed time video, its nice to get it going in 10 secs vs 2 minutes (dvd startup, menus, advertisements),

  7. Pankaj Narula Monday, June 11, 2007

    Om,

    On the bandwidth note, I am ashamed to admit I am still on a plain vanilla DSL line from SBC umm.. AT&T. Available bandwidth in the price point I (usual consumer) am looking hasn’t changed much since the giddy days of ’99

    Let us see what happens in future.

    • Pankaj
  8. I would like to be able to view a movie, TV-show etc when I feel like it, not necessarily when the broadcast media think I should. Just some examples, I may be out thus missing the a show. I may be living in another country that simply does not send the shows I would like to view. How does people overcome this obstacle? People download the shows and they do not much care if they are illigal or not.

    To be able to view what we want when we want to the best media to allow us this as of today are via broadband. However, to be able to compete with pirated material content owners and content distributors will have to reduce their cost and increase the picture quality of the materials, for instance TV-Shows. In addition, it has to become as simple as renting, byuing or viewing a show on your normal system.

    With Apple TV and iTunes they are on the right track. Simplicity, quality (supporting or going to support h264 encoding). But there still is an issue with content delivery costs. One possible way, in my oppinion, to solve this problem is to use “new” or not “accepted” technologies such as p2p.

  9. I don’t think consumers are looking to pay $2.99 for a rental. I think we (at least I) would love to see a Netflix style model through the AppleTV. Imagine having unlimited rentals, 3 downloads at a time for say $30 a month. Keep them for as long as you subscribe to the service, have it someway/how transfer to your ipod for on the go. As soon as you delete one, you can download another straight from your queue to your appletv, and then throw in HD. what better could you ask for?

    http://dot-thought.blogspot.com/

  10. Apple is foward thinking. As soon as AppleTV has movie rental service, I’d jump in. I’ve been looking for a decent ‘jukebox’ for all my dvds, and AppleTV is the best solution for me, although the process of converting your DVDs to AppleTV format is lengthy, it’s worth it. Being able to just sit down with your remote and scroll through my entire collection without having to get up and swap a disc is great.

    A lot of people have thousands of CDs, and the iPod was the jukebox of choice. I have over a thousand DVDs and need an easy way to access any movie at any time, and AppleTV makes this simple. It won’t be long until the masses jump on the bandwagon. As soon as a DVD can be converted in minutes rather than hours, it will be mainstream.

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