Early movie rentals
Apple (AAPL) has developed its version of original video programming that could challenge Netflix (NFLX) and Amazon (AMZN) in the streaming video business. The budgets for original shows and movies have been steadily swelling at Netflix and Amazon as the companies compete to differentiate their platforms. Apple could soon put a twist to that trend.
Apple’s strategy is to bring new movies to its iTunes platform shortly after the movies premiere in theaters. According to a Bloomberg report, Apple has held discussions with several Hollywood studios—including those owned by Comcast (CMCSA), Time Warner (TWX), and 21st Century Fox (FOX)—to allow early rentals of their new movies on iTunes.
Theaters typically have exclusive rights to newly released movies for 90 days—sometimes longer—before the titles could be released on DVD or online. If Apple can persuade the studios to agree to its plan, new films could be made available on iTunes two weeks after they hit the theaters. However, early access to new movies on iTunes would come at a premium cost, potentially in the range of $25–$50 per title.
While releasing movies quickly and charging premium prices for early access could help studios diversify their revenue streams, one of their greatest concerns is content piracy. Apple would need to assure studios that it can secure the iTunes platform to prevent leaking films that are still in theaters.
A deal that brings premium content to iTunes could help bolster the appeal of the platform. With the rise of streaming music and video services, activity on iTunes has stagnated or decreased.
Apple recently reported that 60% of paid subscribers on its music streaming service, Apple Music, haven’t downloaded music from iTunes.