Why Won't MGM Play Online? (AAPL)

Hilary Lewis | May 2, 2008 10:01 AM

Yesterday's iTunes day-and-date announcement was a big deal for Apple (AAPL) and Hollywood. One exception: MGM, the only big name not included in the deal.

MGM, owned by Sony (SNE) and a private equity consortium, is more of a film library than a studio, and doesn't put out many new movies to begin with. You can buy many of the old flicks via iTunes and other services, but if you want to get the new stuff, you'll have to scour the second-tier online players, like Amazon's Unbox (AMZN).

That will change, eventually: The studio recently partnered with Paramount and Lionsgate to launch a premium service with an online component, which is supposed to launch next year. But in the meantime, we can't see the upside in MGM keeping its new stuff off the world's most popular online media store. Anyone want to explain the studio's thinking to us? We're all ears.

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26 Comments

I_am_legend said:

May. 02, 10:28 AM

Could be the fact that they already have an agreement with Xbox Live, and probably will Sony on the PS3 once the kinks are sorted out. In terms of distribution of content, the Xbox and PS3 combined are way larger than the Apple TV, so the urgency is not there. Plus, MGM is a weak studio, major franchise is only 007, and that is not out for a few months (plus 007 movies come out every 3 years). So they really do not have much to offer Apple, and would unlikely get the same treatment at the bargaining table.

abc123 said:

May. 02, 10:35 AM

Sony has been the last studio in many cases to join video on demand aggregation services. They seem to have a "do it yourself" culture and are loath to allow a middleman to step between them and their customer (either the consumer or the network operator or both). There are obviously a lot of exceptions to this, but Sony clearly tends to be the laggard in the market. If Sony follows the same trend it has followed in the tradition video on demand market, I would expect to see them jump on the iTunes day and date bandwagon later this year when it becomes clear that they are missing out on a big distribution opportunity.

I_am_legend said:

May. 02, 10:40 AM

@ abc123 this is not Sony Pictures (they are part of the iTunes deal) this is MGM, a different beast. Partial SNE ownership is just that. Management will still make the call based on their best position.

Davebob said:

May. 02, 11:33 AM

Steve Jobs said before that one difficulty of getting movies for iTunes (especially rental I suppose) was getting the authorization from the creators. Actors, directors, producers, writers etc. need to sign agreements for digital distribution. New movie productions probably have this but obviously for OLD movies (contracts signed before even digital distribution was conceived) it's going to be more difficult.

Peter Kafka said:

May. 02, 12:17 PM

Davebob, There are plenty of old MGM titles available via iTunes. The deal they're not doing has to do with new releases.

greg said:

May. 03, 10:05 PM

Don't they have some deal with Comcast? If so there could be content tie-up that basically all content providers have to work through with Comcast.

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