Apple, Hollywood and video rentals

The MacBook Air may have grabbed all the headlines at Steve Jobs' Macworld keynote Tuesday, but it's the announcement of a revamped Apple TV and iTunes movie rentals that could prove more significant in the long run. We're going to examine how in two separate articles:

Part 1: Apple, Hollywood and video rentals

Part 2: Apple TV makes web movie rentals mainstream

The biggest coup has to be Apple's success in getting all 12 major Hollywood studios to agree to offer online movie rentals. Others have - and are trying - to do the same: think Netflix in the USA or Lovefilm here in the UK.

However Apple has a lot of leverage in Hollywood. Its hardware and applications are used by movie studios and production companies; Steve Jobs is the former head of Pixar, and now the largest individual shareholder at Disney, where he also sits on the board. He is also a charismatic and persuasive negotiator - just ask the Disney executives who first agreed to give Pixar a distribution deal, or Bill Gates.

Despite this Apple has had very limited success with movie downloads so far. Before the announcement on Tuesday it had only signed one major Hollywood studio and its subsidiaries - Disney, surprise surprise - with movies only available in US where total sales have been limited to just seven million to date.

That's because Hollywood - like the music industry before it - is extremely nervous of the power the internet, and its ability to ride roughshod over copyright and, of course, potential earnings.

Why Apple will win

That all changes with movie rentals, and there are two key reasons why:

1) It enables us to watch movies the way most people want to: most of us only watch a movie once or twice, so paying a few pounds to rent it at home rather than trudging in the rain to your local rental store, or buying a full retail copy is a no-brainer. Just look at Sky Box Office or Lovefilm's rental service.

2) Hollywood ultimately keeps control over its content - movies on the iTunes Movie Rentals Store can only be stored and watched on your Mac, PC or Apple TV for up to 30 days and you have to finish watching the movie within 24 hours of you first pressing 'play'. In either case, the movie automatically self-destructs.

This is better than in some ways than deals offered either by Lovefilm or even Sky Box Office, where you only have a 7-day window in which to watch before the movie auto-deletes, and between 24-48 hours to finish the movie once you start watching. Neither of these UK services offers a digital rental copy for your iPod either, which given the install base is another powerful win for Jobs and co.

We should point out that Lovefilm does offer portable Window Media downloads, but only on buy-to-own movies.

With the iTunes Movie Rental Store then everyone's winner - although us Brits will have to wait a bit longer to claim our place on the podium - Apple isn't launching rentals here until later this year.

Click here to read: Part 2: Apple TV makes web movie rentals mainstream