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Apple Said to Be in Talks With Film Studios for Early Movie Rental

Apple Said to Be in Talks With Film Studios for Early Movie Rental

Apple is pressing Hollywood studios for earlier access to movies, according to people with knowledge of the matter, a move that would bolster the company's iTunes business.

21st Century Fox Inc., Warner Bros. and Universal Pictures all confirmed over the past week that they are looking to offer high-priced, home-video rentals of new movies shortly after they open in theaters.

Some studio executives have been pushing to allow home rentals as early as two weeks after theatrical debuts and are considering a deal with iTunes as one option, said the people, who asked not to be identified because the discussions are private.

The most recent talks are part of longer-running efforts by Cupertino, California-based Apple to get new movies sooner, two of the people said. Such an arrangement could help iTunes stand out in a crowded online market for movies, TV shows and music. While the iTunes store helped Apple build a dominant role in music retailing, the company hasn't carved out a similar role in music and video streaming.

Christine Monaghan, a company spokeswoman, declined to comment.

The studios could end up choosing another technology platform instead of Apple to deliver movies more quickly to households.

Hollywood studios typically give theaters exclusive rights to new movies for 90 days or more before issuing them on DVD or making them available for online purchase. With cinema attendance mostly stagnant and home-video revenue flat in recent years, film companies are under pressure to find new areas of growth.

Shares of movie-theater chains fell. AMC Entertainment Holdings dropped as much as 2.8 percent, while Regal Entertainment Group slid as much as 1.9 percent. Cinemark fell as much as 1.1 percent.

Earlier availability of new movies could satisfy a growing consumer appetite and deter piracy, Warner Bros. chief Kevin Tsujihara said last week.

One option is a premium-priced online rental for new movies, at prices of $25 to $50, a possibility under consideration at the studios, according to people with knowledge of the matter.

Theater chains have battled to keep their exclusive hold over new movies, in some cases boycotting films that were released too soon for home viewing. But Cinemark Holdings Inc., the No. 3 U.S. exhibitor, said recently it's looking for solutions that would benefit both sides and held preliminary talks about creating a so-called premium window for home entertainment. Such a service is likely within the next 18 months, one of the people said.

Those talks may have gained momentum after Sean Parker, the founder of Napster, said in March he was trying to create a new home-video service, called Screening Room, that would offer viewers movies on the same day they were released in theaters. The company has also discussed offering movies at home after 14 days in theaters, two of the people said. A spokeswoman for Screening Room declined to comment.

One of the concerns about iTunes is whether it will be a secure platform for delivering movies that are still in theaters, the people said. While Apple encrypts iTunes video files so they can't easily be duplicated, it's possible to use a camera to record a movie playing on a TV screen. A leak of picture that's still in theaters would jeopardize returns for the studios and cinema owners.

Screening Room uses a watermarking technology that's supposed to prevent piracy by making it possible to track down the source of a leak.

To compete with popular music streaming services such as Spotify, Apple acquired Beats Music in 2014 and built its own streaming music service. Yet the maker of iPhones and Mac computers wasn't part of the surge in streaming video propelled by Netflix and Amazon.com.

Eddy Cue, Apple's senior vice president for software and services, has taken small steps toward developing video content with a series of app- and music-based shows, while efforts to obtain streaming rights to films and TV shows have thus far been unfruitful. This month Apple will release a new app, dubbed simply TV, that will serve as a hub for users to watch content from a number of different apps. Netflix is notably absent.

© 2016 Bloomberg L.P.


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