June 10, 2007 10:07 pm

Hollywood studios in video talks with Apple

Apple is in advanced talks with Hollywood’s largest movie studios about launching an online film rental service to challenge cable and satellite TV operators.

The service could be significant for Apple. If it signs enough studios, the group will get access to more premium film content.

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Apple already sells films that can be downloaded and owned, and has distribution deals with Walt Disney and Paramount. Other studios have shied from tie-ups with Apple because of concerns that digital downloading may hit DVD sales.

But studios will be more enthusiastic about joining its video-on-demand service. Films downloaded to rent are unlikely to affect DVD sales.

Apple, which declined to comment, is believed to be aiming for an autumn release.

A film would cost $2.99 for a 30-day rental. Its digital rights-management software would allow films to be moved from a computer to at least one other device such as the video iPod or iPhone. The software would prevent movies being copied.

One studio executive said the service would “compete against cable companies and anyone else offering VOD into the home”.

VOD is a growing revenue stream for cable companies, such as Comcast, and satellite operators, such as DirecTV. Online services also offer VOD, including Microsoft’s Xbox Live, Movie­link and Unbox, a joint venture between Amazon and TiVo.

However, none of these has a customer base as large as Apple.

Sony Pictures Entertainment, 20th Century Fox, Paramount, Metro-Goldwyn-Mayer, Warner Bros and Disney declined to comment. Privately, though, the studios are excited about Apple getting into VOD. “When you think about Apple customers they are so connected to the brand they will try anything to do with it,” said one senior studio executive.

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