How Apple Won Over Hollywood (AAPL, NFLX)
For years, cable companies have been asking Hollywood to let them sell movies on demand the same day a film's DVD goes on sale. No dice. So how did Apple, which is expected to announce so-called "day and date" rentals and downloads tomorrow at MacWorld, make it happen? UPDATE: Rich Greenfield says he was wrong - "day and date" not happening.
Pali Research's Rich Greenfield has a smart take (reg required): Hollywood was willing to work with Steve Jobs, he argues, because it doesn't see him as a threat to its existing DVD business -- its most important revenue stream.
The logic:
• New DVDs with iTunes-compatible digital files embedded on the discs will help boost DVD sales at a time when they're declining.
2) The studios don't think iTunes sales or downloads will cut into DVD rentals, but that cable video-on-demand would:
What will Steve Jobs unveil at MacWorld? There's still time to place your bets at the SAI MacWorld Predictions Game.
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Pali Research's Rich Greenfield has a smart take (reg required): Hollywood was willing to work with Steve Jobs, he argues, because it doesn't see him as a threat to its existing DVD business -- its most important revenue stream.
The logic:
• New DVDs with iTunes-compatible digital files embedded on the discs will help boost DVD sales at a time when they're declining.
2) The studios don't think iTunes sales or downloads will cut into DVD rentals, but that cable video-on-demand would:
In a sense, the studios could be looking at iTunes rentals as an incremental “portable” or out-of-homeIt's certainly a calculated risk on the part of the studios, who are well aware of what happened to the music business when it cut a deal with Jobs in 2003: Apple ended up with a lock on the digital music business. But as we've noted before, Hollywood is in a much stronger position in 2008 than the music business was 5 years ago. It will be interesting to see if that's allowed them to cut a smarter deal.
rental window, rather than a replacement for the Blockbuster and Netflix DVD rental business.
What will Steve Jobs unveil at MacWorld? There's still time to place your bets at the SAI MacWorld Predictions Game.
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I think Steve Jobs must appear as the devil the movie industry knows, rather than the devil they don't. His ties with Disney and Pixar must pull enormous weight and possibly allay some of their fears, since his knowledge of the movie industry must at least mean he is more sympathetic to their needs.
For all we know, Steve Jobs could have given the movie moguls a peek behind the crimson curtain at the "Oh, and one more thing..." — and might that thing be an Apple TV 2.0?
We'll know tomorrow...