Apple That

Whether 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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In a somewhat quiet move, movie studios have expanded the feature set of content that is available on the iTunes Store, allowing users to search for specific words from a film’s script or even select a specific clip and share it with others via a social networking site like Facebook or Myspace.

This effort began with Sony Pictures Entertainment who has been testing features embedded in iTunes versions of recent film releases. What this means is that only the iTunes versions of movies allow users to access a search button which gives them the ability to input a word and find out where it was said in the script. Users can also pull up a link to the exact moment in the film that the line was delivered.

These features can be found in a few different Sony movies including “The Other Guys”,  “Salt” and “Resident Evil: Afterlife”. The “clip & share function” allows users to select certain scenes to post on their favorite social networking sites while a playlist of songs from the film offers you the ability to buy those songs through iTunes.

According to a report from PaidContent.org, “Mind-blowing add-ons? No, but they do represent the intent of studios like Sony, which declined comment, to offer differentiating value on digital platforms from that on DVD, where extras are often nothing more than a collection of additional short videos.”

This new content seems to be in response to the unique additional bonus features that are offered from Blu-ray movies to devices connected to the internet. Some Blu-rays feature BD-Live content. BD-Live content gives viewers the ability to access internet-based content that you cannot find on the disc like director chats, games, downloadable featurettes and quizzes.

The new iTunes bonus content is not, however, a simple repackaging of content already available through BD-Live. According to PaidContent.org, these new capabilities found in the movies from Sony are exclusively found on iTunes. This is noteworthy due to the fact that Sony had a hand in spearheading the Blu-ray format and crushing the competition (HD-DVD) with Sony’s integration of the technology into the PlayStation 3.

These new features are also only available to people who purchase the movies via iTunes. This new content helps to differentiate legitimate purchases from rentals, in hopes of giving users more value for the higher price that is associated with purchasing the movie as opposed to renting it.

This move to promote purchases over rentals indicates that Apple’s iTunes has seen a drastic increase in digital rentals. Brian Marshal, an analyst with Gleacher & Company, stated last week that he believes 75% of movie viewings through iTunes are rentals with an average movie selling price of $2.99. This just shows that a mere 25% of users actually decide to purchase films through iTunes.

Apple has also used its new streaming-centric Apple TV, priced at just $99, to push renting of movies and TV shows. The Apple TV went on to sell more than 1 million units in the first three months of availability.

This new feature could do great things for the iTunes Store and Apple’s digital movie outlet. With the ability to get a lot of unique features, this may be just the thing to take some of that 75% of renters over to the 25% of buyers.

Source: Apple Insider

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