One reason that Apple Inc. (NASDAQ: AAPL), Amazon, Netflix and others have been getting into the movie/video content business is to enable these streaming media companies to sell their content at a price their subscribers are willing to pay.
Movie studios and theater owners would prefer to be price-setters, telling consumers how much they will have to pay in order to view the studios’ content.
That’s the nub of current negotiations between Apple and the major Hollywood studios over pricing for consumers to purchase a 4K video from iTunes to stream to their Apple TV devices. Apple wants to keep prices for the new format TV at $19.99. The studios are seeking an increase of $5 to $10, according to a report at The Wall Street Journal.
Support for 4K content and HDR are said to be included in the September release of the latest version of Apple TV. Apple already charges a premium price for the device ($149 for the current non-4K capable version of Apple TV) compared with $90 for a Roku Premiere+ player. Apple’s share of the over-the-top TV market is dwindling, not just because it costs too much but because it’s about 12 months behind in the development cycle.
From Apple’s point of view, increasing the number of Apple devices in a customer’s home ties that customer more closely to the company and raises the odds that the customer will buy another iPhone when the time comes.
But the movie studios are not as easy to put the squeeze on as, say, a relatively small game developer. The studios know that they have something — big budget blockbuster movies — that cannot be duplicated and if Apple won’t pay their price, someone else will. If no one will pay up, then the blame game starts.
Device makers like Apple will charge the studios with trying to rob consumers and the studios will charge Apple with trying to get something without paying for it. Either way, consumers stand to lose when the giants declare war.
The Wall Street Journal also noted earlier this month that the studios are looking at a plan that would offer digital rentals within weeks, not months, of theatrical release for a price of between $30 (for a four to six week delay) and $50 (within two weeks). Theater owners are likely to want some compensation and the studios might have to give up some of their own window for when discs go on sale or become available for rental.