Apple Closes In on Hollywood
Steve Jobs is negotiating with the big studios to offer more movies for sale and rental on iTunes, but both sides will have to give a little — It has been Hollywood's worst-kept secret: Steve Jobs is starting to win over the film industry.
Context & Ripple Effects
The backdrop here is two years of studio anxiety: media executives in Hollywood and New York have reportedly fretted since at least late 2005 that Steve Jobs could do to video distribution what he did to music — a fear captured in reporting from December 2007. That music history looms over these talks because the relationship between Jobs and Universal's Doug Morris was famously fraught amid the iTunes rivalry, giving studios a concrete cautionary tale about ceding distribution to Apple.
What makes this moment plausible rather than speculative is infrastructure: broadband access has already been confirmed as the enabler behind online video services like YouTube and iTunes. The negotiations themselves remain unconfirmed — reported as talks, not signed deals — so the story is best read as Hollywood testing whether it can strike terms with Apple before terms are dictated to it.
First-order effects
- If the studio deals close, iTunes gains a materially deeper film catalog for sale and rental, and the major studios gain a new digital revenue window — with both sides conceding terms, per the report.
- Studios that hold out face the risk their rivals' catalogs define iTunes as the default digital movie storefront, repeating the music-industry dynamic they have spent two years worrying about.
Second-order effects
- Competing digital distributors will be pressed to match whatever sale-and-rental terms Apple extracts, forcing studios to price and window films consistently across platforms rather than deal-by-deal.
- A successful movie push strengthens Apple's hand in its next round of content negotiations, since every signed studio makes the marginal holdout's absence more costly.
Third-order effects
- If the pattern holds, film follows music down the same path: a single dominant digital storefront accumulating bargaining power over suppliers who once controlled their own distribution.
- The unresolved question — whether studios can negotiate protections Apple never granted the labels — will shape whether Hollywood ends up a partner in digital video or a supplier to it.
The trend: Digital video distribution is following the music industry's trajectory, with Apple converting broadband-enabled storefronts into leverage over major content suppliers.