Apple To Launch Online Movie Rental Service; For Fall; $2.99 Rental: Report

Updated below: This is bound to happen sooner than later, as Apple consider pushing more content through its AppleTV conduit to the TV: FT reports that the company is in advanced talks with the big movie studios about launching an online film rental service. It has download deals with two studios — Walt Disney and Paramount, and other studios have shied from tie-ups with Apple because of concerns that digital downloading may hit DVD sales.

Online VOD rental is a different ballgame, and studios know they would get a bigger share of revenues and think this won’t affect the DVD sales. Also, there are some anecdotal indications that movie downloads on iTunes may not be doing as well.

The story says a film would cost $2.99 for a 30-day rental, which compared to other online movie services like CinemaNow, Movielink of Amazon Unbox is much cheaper and the watch window is much bigger (30 days instead of typical 1-2 days). Its DRM software would allow films to be moved from a computer to at least one other device such as the video iPod or iPhone, the story says, and prevent being copied elsewhere.

FT 2: With Apple set to enter the fray with its own service, pressure on the studios to bring forward the VOD release window is likely to increase. This would spell bad news for Blockbuster, as well as Comcast, DirecTV and other US pay-TV operators.

Updated: WSJ: Viacom’s Paramount Pictures currently in favor and NBCU-owned Universal Studios Inc. currently opposed, the story says…details are still far from being finalized. The story says that if Apple can persuade Hollywood to offer its new movies for rent, it could pave the way to offering them for sale, where studios have balked at Apple’s pricing, which is currently $14.99 for new titles, compared to around $18 for a new DVD.