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Apple’s iTunes Movie Rentals May Soon Be Facing Competition from Google and YouTube

Posted by Zack | Posted in Uncategorized | Posted on 26-04-2011

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iTunes movie rentalsWhether you love it or hate it, whether you think it is incredible for the music industry or running it into the ground, Apple’s iTunes IS one of the biggest things to happen to music in recent years. One thing that stands out about iTunes is that you can get more than just music. You can buy movies or even apps off of iTunes and you can even rent movies. However, it is in that field, movie rentals, that iTunes may be getting its first real opponent.

Since supposedly finalizing deals with multiple major movie studios, Google is all primed and ready to start a Video on Demand movie rental service via YouTube that is said to challenge the dominance of Apple’s iTunes movie store in the market of Video on Demand.

YouTube began offering movie rentals about a year ago but has yet to rent out mainstream movies. Instead, YouTube offered movies from mostly independent studios. Google, however, plans to build the service with the imminent launch of a movies on demand service that includes major Hollywood studios.

Mainstream movies have been quietly added to YouTube with rental prices ranging from $1.99 to $3.99. According to a YouTube spokesman, “We’ve steadily been adding more and more titles since launching movies for rent on YouTube over a year ago, and now have thousands of titles available.” The spokesman declined to comment on the rumored launch of major studio films.

According to one executive from a Hollywood studio that has already signed with YouTube, “We think we will start with VOD, but broaden to include sell-through over time. We are pretty excited because we are happy to see new entrants come in transactionally rather than a subscription model.”

The report has stated that movies will become available on YouTube the same day they can be rented at video stores or on iTunes, which is ahead of subscription services like Netflix. “What’s really good about their approach is rather than another subscription offering, they’re going into a fresh area where there have been fewer leaps forward,” said one studio executive.

At a seminar earlier this month, Google executives seemed to hint at a YouTube VOD store. YouTube Vice President of TV and Film Entertainment Robert Kyncl stated, “Imagine if you had a video store on YouTube, where you could rent or buy the movie without being sent elsewhere.” However, when Kyncl was asked about specific details, he replied, “Obviously, there are things coming, but we can’t talk about them yet.”

Apple began offering movie rentals via iTunes back in 2008 with a major launch that included all of the major Hollywood movie studios. The initial rate for a movie rental was $2.99 with HD versions and new releases costing more. After their purchase, customers had 30 days to begin watching the movie and 24 hours to finish once playback had begun.

After Apple launched their second-generation Apple TV last year, they began offering $0.99 TV show rentals. However, the only two studios that were on board at launch were ABC and Fox.¬†Apple CEO Steve Jobs, at a media event to unveil the set top box, suggested that the other studios would soon relent and begin offering TV show rentals. Jobs stated, “We think the rest of the studios will see the light and get on board pretty fast.”

Research group IHS revealed earlier in the year that Apple had maintained a 64.5% market share of the online VOD in 2010 while also losing some share to Microsoft and Sony. In 2009, Apple controlled 74.4% which does not count subscription services like Hulu or Netflix.

Apple generated $1.4 billion in revenue from the iTunes online store in the most recent March quarter, however, it is unclear what portion of those earnings consisted of movie rentals.

Source: Apple Insider – Google to take on Apple’s iTunes with mainstream movie rentals on YouTube

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