Why Apple should launch iTunes movie rentals now

Ever since Apple enabled users to download movies on iTunes, the world waited with bated breath to see if the company would launch a movie rental service. Unfortunately, those people are still waiting.

But with a renewed sense of importance toward getting movies through iTunes into your hands, Apple may finally pull the trigger and create a full-fledged movie rental business.

Even better, Piper Jaffray analyst Gene Munster believes that launch could happen at Macworld. As Munster points out, his team expects Apple to announce new partnerships with at least one more movie studio, and this may be followed by the immediate availability of a movie rental service.

If that's not enough to whet the appetite of Apple fanatics all over the world, Munster also believes the Apple TV will play a key role in the launch.

"If Apple begins renting movie downloads on iTunes, we expect a related software update to the Apple TV enabling movie rentals direct to the Apple TV. In fact, the Apple TV software currently includes 'iTunes Store settings' in its settings menu, but the option is essentially inactive," he wrote. "We expect this setting to be activated soon; users will likely be able to log into their iTunes accounts directly from the Apple TV and browse movie rentals, then download them directly to their Apple TV."

Of course, the story doesn't end there. Simply put, should Apple even consider movie rentals, and if so, what good will it be for the company? Suffice it to say, if Apple decides to give movie rentals the green light, it'll be one of the company's most intelligent moves in years.

As Gene Munster explained in his message to clients, "We have been expecting iTunes movie rentals for nearly one year, but due to pricing disagreements and DRM-related issues, the studios and Apple have not yet come to an agreement."

And therein lies the rub.

Once again, we're at the mercy of a group of movie studios who have no idea what we want or how to bring it to us. Why should we not be given the service we want because some idiot at MGM is deathly afraid of his precious B-movies getting pirated? Got news for you, friend: it's already happening, and adding more DRM won't work.

To make matters worse, these movie studio losers are so incredibly worried about pricing, they've lost sight of what we really want: better movies at a better price. Is that too much to ask?

But I digress. Unlike the movie studios, Apple has been able to bring something to the table that most other companies have failed to do--products and services that most people actually want. And when it comes to movie rentals, don't expect anything different.

But why should Apple get in on this business, you ask? It's simple, really: to address a growing demand of people looking for such a service and to revive the Apple TV.

The People demand movie rentals!

With Blockbuster tanking into obscurity and places like Netflix trying to allow you to download movies instead of waiting for them in your mailbox, now seems like the perfect opportunity for Apple to get in on the rental game.

Quite honestly, if Apple ever decided to offer a service similar to Netflix's core business model, I'd scoff and tell you why it would be an awful idea. But unlike Blockbuster's brick-and-mortar tack or Netflix's mailbox strategy, Apple would be getting in on something that has been relatively untapped.

Let me ask you this: would you rather wait two days for a movie you want to see now or wait about an hour for that same movie to download onto your system? Chances are, you'll take the latter.

Of course, iTunes movie rentals won't work in the slightest unless Apple can find a way to distribute the videos to the right devices. After all, would you really want to sit in front of your computer screen for two to three hours just to watch a movie? Sure, some would, but if Apple is trying to tap into a larger market, computer viewing simply won't work.

To make matters worse, Apple needs to be aware that pricing is an extremely important element in all of this. Why would I rent the movie for $8 if I can buy it for $10? Generally speaking, movie rentals really shouldn't go above $5, but a sweet spot of about $3 to $4 should be its goal.

Revive the Apple TV

There's no debating the fact that the Apple TV has performed much worse than some expected. As Forrester Research told us last week, the Apple TV has sold just 400,000 units--a full 600,000 units shy of the company's estimate for the year.

And while Steve Jobs called the device a "hobby," and most are speculating that it's an 18-month trial product to see if there's any interest from consumers, iTunes movie rentals could have a profound impact on Apple TV sales, if integrated with the device properly.

Of course, integrating movie rentals with the Apple TV will be a vexing issue for Apple. With only 400,000 units in the wild, Apple obviously can't justify allowing users to watch only movie rentals on its multimedia device, right? Think again.

Why wouldn't Apple's movie rental strategy mirror how it handles iTunes and the iPod? Think of it this way: you could still download movies from the iTunes Store and watch them on your computer, but if you want to view those movies on any other screen, you'll need to have an Apple TV handy.

Even better, as Munster points out, why not install an add-on to the current Apple TV software that would enable users to download rentals right from the device?

Believe it or not, iTunes movie rentals may be the only strategy that could save the Apple TV from its coup de grace. Sure, it may not increase sales overnight, but over time, Apple may be able to realize the kind of sales on that device that it has been able to enjoy on others over the past few years.

Don't let the company kid you: iTunes movie rentals are coming, and Apple should bring them as soon as possible.

[bgavinw]

Can't forget to mention the Vudu, which is basically a movie-rental-only box that can do HD and has a great interface (a la Apple TV). The Apple TV could smoke the Vudu if Apple would just allow movie rentals. A hardware update to the AppleTV to add cheap storage (or even allow USB external) would also make it on par with the Vudu (which I think has a 300gb drive). Basically, if Apple doesn't move, then Vudu will grab up the market of people who want on-demand rentals (w/ HD capabilities) over broadband. Apple has the leg up in that they can extend that to their whole universe (Mac, PC, iPod, iPhone, TV) versus a Vudu box (just TV).

[john55440]

I have no idea if Apple will or won't rent movies in the future, but content providers are no longer interested in complying with Steve Jobs demand that he unilaterally dictate terms and conditions.

As AmazonMP3 demonstrates, Apple/iTunes isn't the only game in town. I suspect that content providers will continue to seek out alternatives to Apple.

[Astinsan]

Maybe there isn't a cheap enough delivery system to handle movies yet. (eh emm .. bittorrent filtering)

Then there is the movie companies that are in competition with apple's counterpart.

Then there is the worries about IP and protecting it.

To much to expedite this to itunes.

[rsgregor]

I am all for Apple introducing movie downloads...providing they offer HD as well. With the Apple TV having HDMI, this would seem like the next logical step. Let's face it, the quality of the movies on iTunes right now is horrendous. If Xbox Live can offer me HD movie downloads, I know Apple can make this technology work as well. I know it isn't "true HD," but for a movie that downloads in a relatively short time, the quality on Xbox Live is still pretty good. Let's hope this comes sooner than later.

[Tim.b]

Although Tivo user numbers aren't massive either, they've already successfully launched Amazon's UNBOX rental/purchase service available to ANY Tivo S2/S3/HD box user with a broadband connection. The prices are right too, all the way down to .99 weekend offers. And, it WORKS! --- I wouldn't be surprised to see HD come along either.

[Faztang]

i wish apple, amazon, microsoft, or walmart would figure out a way to get video rentals to work on an mp3 player. only way to get videos on them now through these sites (except microsoft) is to purchase which is a waste.

[aintrabar]

I thought the Apple TV was an interesting concept. But it misses the mark on so many levals. Basically theres no way I'm touching the thing till it does HD. And rentals would be genius for it!. Heck they could in a single blow end the entire Bluray-HD dvd fight if you could get a single box that does movies (purchase or rental) With no concerns on what format.

[JonathonStriker]

Hope you don't get fired for calling the movie studios stupid, although I very much agree.
You'd think by now they would have learned from the whole music issue, not to mention the whole Windows OS issue alone, that when you tell people you don't want them to do something, and that you've done something to prevent that from happening, you simply lit the spark and it's going to occur anyway. But I understand that with the new DVD recorders which are easier to use now, and better quality than VHS, are part of the issue. That's not to mention jusst simply decoding and converting the videos, stripping the DRM off of them.
While I could care less for movie rentals online, I still think it would be a good move to make. I'd rather have a way to rip my current DVDs to my iPod without going through a couple of programs to rip and convert my collection.

[Wiz Zee]

It all comes back to rental windows. If Apple can bully the studios into letting iTunes rent movies as soon as they are released for sale/rental as DVDs, good for Apple and good for consumers.

Otherwise, its a big snore. I can spend few hundred bucks to buy another box to attach to my TV that lets me do the exact same thing as cable/sattelite PPV? Doesn't really seem worth it...

[skellener]

> Why Apple should launch iTunes movie rentals now

That statement is about a year too late. It should have happened with the debut of the AppleTV along with HD content.

This is an easy one. No rentals or HD content on iTunes by MacWorld and the AppleTV is dead.

[MetaWoody]

Why not use the on-demand movie via your cable set-top box for rentals rentals. It's typically $4. Pretty cheap. No waiting for a download and it starts immediately. It's here today. No need for Apple and a long download.

Call me crazy ... that seems like a no-brainer.

[Jesse Chan]

It's time for introducing this feature. Bandwidth costs are falling and people are moving online more and more. The economics look good: http://fishtrain.com/2007/09/23/itunes-movie-rentals-and-old-media/

[vio1234]

Do not overlook the fact that the iphone can now be connected to a TV to share downloaded movies and videos on your TV via a very easy to use adapter. This is a great option allowing me to rent movies to watch durin gmy lunch break, on an airplane, or share with my family on a Friday night.

[lantzn]

Apple TV plug-in for movie rentals released.

http://www.appletvhacks.net/2007/11/29/jaman-player-beta-10-now-available/

[Thal3s]

I own an Apple notebook and like all Mac owners, I love the company itself, but movie rentals? Common.

How would this work for the 95% of the population without a Mac or AppleTV? It wont. They cant watch movies with Apple's DRM.

Therefore it's a dumb idea.

[larryennis18466]

Yes, Apple should start rentals and use the Apple TV as it's platform. Also for these rental prices to be set at around $3.00 or $4.00. But the very first step is to give the "hobby of Steve's" a major upgrade with keeping the price @ $299 or lower. First, the downloads should be done from and directly to your AppleTV without a Mac or PC 'bridge". Keep it simple. Still there is people out there that does not have a computer in their house or wants to download it on their computer first then upload it to the device. Let it have both 802.11n and gigabit networking. If there is a person out there without the network or wireless, all they need is a Cable or DSL modem to connect it to. Apple could sell this service as well. Second, get rid of the remote and have a remote that can do all the functions it needs in a simple design. Third, support HD content for people who has high def. Fourth, add a composite video connection for the other people that still have the older TVs. Apple has to give a little something to every consumer to make this device attractive to everyone the way they done it with the iPod.

[heller.bob]

Has anyone used the xbox 360 movie rental service? It's fantastic. The interface is smooth and easy to navigate. Xbox's service also offers the option to rent the movie in standard def and hd (prices are more expensive for hd, but in line with offerings from your cable box). You can also buy tv shows just like on itunes. It's a great system. And, for 100 dollars more than an apple tv, it does basically everything an iTV does (i'm not certain on apple tv's features) and it is a high definition gaming console. Seems to me that xbox 360 has the clear edge here. I should add that I wouldn't be such a microsoft fanboy if apple would offer subscription music like the zune, and movie rentals like the xbox. I would go back to an Ipod in a second if the zune subscription service wasn't such a better value than itunes (I have both an ipod video and a 30g microsoft zune).

[Scott Gardener]

One additional thing to fix, and Vudu brings up the point: high definition. Right now, iTunes downloads are 480p and 2 channel stereo audio. To be competitive in the long run, we need to see support for 5.1 (or better) audio, as well as at the very least 720p or 1080i. (though preferably 1080p as well) For some reason, Apple TV has an HDMI connector that asks for either 720p or 1080i on setup, which is odd, given that its content right now is neither.