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Apple's TV Rental Service: A New Direction in Online Streaming

Strategic Insights

— 2 min read

Apple Inc. is poised to launch a TV rental service, allowing iTunes users to rent TV shows for 99 cents, according to sources familiar with the plan. The service, which is expected to be unveiled at a San Francisco event on September 1, would give Apple users access to some of the most-watched shows on TV, increasing the appeal of its devices, including the iPad, iPhone, and iPod Touch.

The new service would allow viewers to rent programs from News Corp.'s Fox for 48 hours, and would be available to rent within 24 hours of their air dates. The episodes would be commercial-free, and the service would compete with existing online video services offered by Netflix, Amazon.com, and Hulu. Experts see the move as a smart strategy for Apple to increase its presence in the online streaming market and differentiate itself from competitors.

Key Takeaways:

  • Apple is in advanced talks with News Corp. to let iTunes users rent TV shows for 99 cents.
  • The rental service would give Apple users access to some of the most-watched shows on TV, increasing the appeal of its devices.
  • The service would allow viewers to rent programs from News Corp.'s Fox for 48 hours.
  • Episodes would be available to rent within 24 hours of their air dates and would be commercial-free.
  • Apple plans to hold a San Francisco event on September 1 to unveil the service.
  • A new version of the Touch with a higher-resolution screen and a $99 version of the Apple TV set-top box would also be introduced.
  • The new Apple TV would have a smaller hard drive than the earlier version and would be aimed at letting people stream content from iTunes.
  • The TV service is a new direction for Apple, focusing on using video to sell mobile devices rather than to break into living rooms.
  • The move is seen as a smart strategic move for Apple to increase its presence in the online streaming market and compete with existing services.

Statistics:

  • The four big U.S. broadcast networks - Fox, NBC, CBS, and ABC - receive about $250 million (U.S.) a year in retransmission fees industrywide.
  • This number will balloon to several billion dollars within five years.
  • The number of TV viewers who use Apple devices to watch TV is expected to increase with the launch of the new service.
  • The rental service is expected to compete with existing online video services, including Netflix, Amazon.com, and Hulu.
  • The new service would offer a new revenue stream for Apple, increasing the company's presence in the online streaming market.

Sources:

  • Bloomberg News
  • RBC Capital Markets
  • Altimeter Group
  • Toronto Star. All rights reserved.

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