Apple in online film-rental deal with Fox studio
By Matthew Garrahan in Los Angeles and Kevin Allison in San Francisco — Apple has signed News Corp's 20th Century Fox studio to a new online video-on-demand service in a deal that could change the way people pay for online film content.
Context & Ripple Effects
With no studio yet committed to renting films through iTunes, Apple has landed News Corp's 20th Century Fox as the first anchor for a video-on-demand rental service — a deal the FT frames as potentially changing how people pay for online film content. The pickup was unusually broad for a holiday-week story, with the Wall Street Journal and trade and blog outlets following within a day.
Timing matters on both sides: Apple shares crossed $200 for the first time in the week of the signing, capping a year in which the iPhone and the AT&T exclusivity deal put Apple at the center of consumer tech, and rumors are already swirling about Steve Jobs's Macworld keynote in San Francisco this January, where a new portable device is widely expected.
First-order effects
- Fox's catalog becomes rentable through iTunes, giving Apple's rental service its first major-studio supply just weeks before the Macworld keynote where Jobs is expected to make announcements.
- News Corp gains a new digital revenue window for Fox films at the moment Apple's stock momentum and installed device base make the storefront maximally attractive.
Second-order effects
- The remaining major studios face a choice between holding out for their own digital channels and licensing rentals to iTunes, where Apple's hardware reach sets the terms.
- Rental storefronts run by Netflix, Amazon and Microsoft now compete against a service bundled into the iPod and iPhone ecosystem, pressuring them on price and release-day availability.
Third-order effects
- If the other studios follow Fox, digital rental becomes a standard release window alongside DVD, and Apple's position as the intermediary between Hollywood and consumers hardens into structural gatekeeping over how films are priced and delivered online.
The trend: Film distribution is shifting from disc ownership toward studio-licensed digital rentals, with Apple's device ecosystem positioning it as the industry's default storefront.