Apple (s AAPL) is about to get a lot more serious about its “hobby” with the next release of its Apple TV set-top box, as sources say that the software company will look to push a new streaming rental service that will offer up individual TV episodes for 99 cents.
According to sources, Apple is trying to get TV programmers to let it rent individual TV shows for 99 cents each, as opposed to the $1.99 it receives for sales of standard-definition episodes and the $2.99 it gets for selling HD episodes. The TV rental program would work in much the same way that movie rentals now work through iTunes; once an episode is purchased, the consumer will have 30 days to start watching the video. And once started, the TV rental will be available for 24 hours before it expires.
Unlike its current TV and movie sales through iTunes, the new service will move content into the cloud and stream it to users, rather than having them download videos. By doing so, Apple will merely be following a broader industry trend. After all, almost all web video providers today — including industry heavyweights like YouTube (s GOOG), Netflix (s NFLX), and Hulu — use streaming technologies rather than downloads for video delivery.
And there are indications that Apple might be forced to start streaming, based on reports about the technology specs of the next Apple TV set-top box. Earlier this year, Engadget reported that the next-generation Apple TV will use iOS, the same operating system used by the iPhone and iPad, and Flash memory, as opposed to a hard drive for storage. Due to a massive reduction in storage capability, it shouldn’t be a surprising move for Apple to launch a streaming service in place of its current download service.
If it can get content providers to allow it to rent episodes for half the price that they’re getting for consumers to own those shows, Apple is hoping that it can increase the volume of TV shows that are watched through iTunes. But is it already too late?
Apple’s foray into the low-price TV rental market is coming not long after Hulu announced its paid subscription service Hulu Plus, which gives users access to full seasons of many broadcast TV shows for just $9.99 a month. But Apple TV will have access to a lot of cable network content, like episodes of popular shows like Mad Men and True Blood that won’t be available through the Hulu Plus offering.
Even so, Hulu Plus will be available on multiple consumer electronics devices and platforms, such as Samsung, Sony and Vizio connected TVs and Blu-ray players, the Microsoft (s MSFT) Xbox 360 and Sony (s SNE) PlayStation 3 gaming consoles and even Apple’s iPad and iPhone. Meanwhile, iTunes TV rentals will only be available on Apple TV and other associated Apple products.
Based on the massive growth of Netflix and its Watch Instantly streaming service, consumers have shown that they are drawn to the convenience of a subscription online video service they can watch on their TV for a low monthly fee. But Apple TV rentals could be instrumental for users that want to watch content they can’t get through Netflix, Hulu or other subscription services.
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