Apple TV moves from download to streaming

Move acknowledges shift in biz from ownership to rental

Apple is wading into the stream. The company’s much-anticipated overhaul of its Apple TV service eschews the download-to-own model in favor of an HD Web streaming rental biz.

Apple’s plan to make movies available day and date with DVD for a $4.99 rental is in keeping with the film biz’s piracy-combatting push to make titles available for easy legal downloads through a host of platforms, from Apple’s iTunes to Netflix (which Apple TV will support); Amazon, Hulu and Blockbuster; the major videogame consoles from Microsoft, Sony and Nintendo; and, soon, YouTube.

Apple’s new push is also another sign that the rental market for movies is fast overtaking sales at a time when consumers are tightening their belts and growing accustomed to viewing programming on an on-demand basis via broadband rather than owning a permanent download or a physical disc.

But on the TV side, Apple’s plan to rent individual segs of TV shows for 99 cents has divided the biz. Disney and Fox are the only majors on board with the service, which will begin rentals in about a month, once the Apple TV hardware becomes available. The initial slate of shows that will be available include Fox-produced series for the Fox net — including “Glee,” “Family Guy” and “Bones” — and Disney-produced series for ABC, ABC Family and Disney Channel. BBC America is also on board with some of its shows.

The TV programming will be available for rental a day after the segs premiere on the nets — the same release pattern that the major nets follow for Hulu, ABC and Fox’s proprietary net websites, where segs are offered for free but with embedded commercials. Apple TV users will be able to watch the movies and commercial-free TV segs within 30 days of the rental. Once users have started watching the programs, they’ll have 48 hours to finish them.

In unveiling the new offerings, Apple CEO Steve Jobs expressed optimism that other networks would “see the light and get on board” with the company “pretty fast,” during Apple TV’s relaunch. The rentals will be available in about a month, when the Apple TV hardware, selling for about $99, becomes available. Apple TV was introduced in 2007 at a higher price point of $229, but until now there never seemed to be much executive interest in pushing the technology forward as Apple has with its iPod and iPhone product lines.

“We’ve sold a lot of them, but it’s never been a huge hit,” Jobs said of Apple TV.

TV execs are already worried about the high level of exposure for new primetime skeins and the effect on ratings for the first-run telecast and on longterm syndication values. Some see the Apple rental plan as a means of using TV programs as a carrot for Apple to sell its hardware, and they worry that over the long term such episode-by-episode distribution will undercut the value of series libaries.

“This is not healthy for the business,” said a TV topper at a studio that is shying away from the Apple TV rental plan. “You don’t want people dis-aggregating our content one episode at a time. We’re in a 22-episode a year business of getting to 100 or 200 episodes and monetizing those full seasons at premium prices. You don’t break that up with a 99-cent rental.”

In a statement, Fox Filmed Entertainment topper Jim Gianopulos indicated that the offering was an experiment for the studio.

“We’ve enjoyed a long and valuable relationship with Apple and we’re excited to be working with them over the next several months to explore this innovative offering,” Gianopulos said.

Among the Fox series to be offered under the plan are contempo hits like “Glee,” “Family Guy,” “Bones” and “American Dad” and selected titles from the Fox vault, including “Arrested Development,” “Buffy the Vampire Slayer,” “Lost in Space” and “The Mary Tyler Moore Show.”

Disney has been Apple’s biggest partner in iTunes from the get-go (Jobs is the largest individual shareholder in the Mouse House, after all), as noted in a statement from Disney-ABC TV Group prexy Anne Sweeney.

“When we put our shows on iTunes five years ago, it was revolutionary,” said Sweeney. “Since then, we’ve continued to provide viewers with innovative new ways to access our programming, and today we’re proud to team with Apple on a rental option for fans of our shows.”

Disney’s decision to offer some cable skeins has raised eyebrows at a time when cable, satellite and telco operators are concerned that alternative distribution platforms for popular cable programs will encourage consumers to dump their monthly subscription plans in favor of a la carte program purchases.

Others counter that even the traditional iTunes download-to-own business has proven to have a limited aud, compared to the reach of traditional TV telecasts.

Streaming video is something Apple has soured on in the past, so Wednesday’s embrace of the on-demand cloud by Jobs & Co. is a notable shift. For Apple, it lowers production costs — and could be a test balloon to expand streaming to its music devices.

Jobs stressed that most video on Apple TV will be offered in HD because consumers “want everything in HD. The HD revolution is over. It’s done. HD won.” Ironically, Apple TV will not support full 1080p HD. It’s capped at 720p.

Still, while movies are available and pricing isn’t turning off the masses, getting programming from computers onto living room flat screens is still proving cumbersome for consumers, though new web-enabled TVs and embedding Netflix onto the Xbox 360, PlayStation 3 and Nintendo Wii have started to streamline the process. Apple TV should help make that a little easier.

The palm-sized box, priced at $99, connects to a TV with an HDMI cable and can wirelessly play movies and TV shows from iTunes, either from a computer, iPad, iPhone or iPod Touch through Wi-Fi. The device also streams Netflix and YouTube clips.

Since it doesn’t have a hard drive, Apple TV cannot allow consumers to record video, making it just a streaming device.

Apple is hardly the only player making a play to stream content . Studios have also paired up with individual TV manufacturers like Sony and Samsung, who offer their own branded movie services through iPhone-like apps that appear on screens. Sony said Wednesday it will roll out its Qriocity VOD service, available on its Bravia-branded HDTVs and Blu-ray players in the U.S. since April, across Europe this fall.

And on Wednesday the Wall Street Journal reported that Amazon.com is planning to launch a subscription video service of its own before the end of the year, which would deliver TV shows and movies with an initial focus on catalog content.

Cynthia Littleton contributed to this report.