I repeat: devices which require collusion and are designed to promote
collusion. This "spars" business shouldn't even have a reason to exist.
"'I wouldn't tell Apple how to price their iPads,' said an executive at one
studio in talks with Apple."
Pretty much hits the nail on the head.
Bert
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http://www.cetusnews.com/tech/Apple-Spars-With-Movie-Studios-Over-Pricing-Ahead-of-Apple-TV-Rollout.B1gk-p6zKb.html
Apple Spars With Movie Studios Over Pricing Ahead of Apple TV Rollout
Apple is scrambling to strike deals with Hollywood studios to offer ultra-high
definition films on its new Apple TV, but discussions have been hampered by
disagreements over pricing.
By
Ben Fritz and Tripp Mickle
Apple Inc. is scrambling to strike deals with Hollywood studios to offer
ultrahigh-definition films on its new Apple TV, but discussions have been
hampered by disagreements over pricing, according to people with knowledge of
the talks.
The tech giant will unveil the new version of its streaming media device at an
event Sept. 12 and tout its compatibility with new 4K televisions, people with
knowledge of its plans said. The 4K format offers more than 8 million pixels
per frame-significantly sharper than traditional high-definition video at the
same size. Apple will also reveal updates to its iPhone and Apple Watch,
according to people briefed on its plans.
Apple wants to have major Hollywood films available in ultrahigh definition on
the new device, expected to go on sale later this year. However, it wants to
charge $19.99 for those movies-on par with what it sometimes charges for new HD
movies, the people with knowledge of the discussions said. Several Hollywood
studios want to charge $5 to $10 more for 4K movies, the people said.
Conflicts over pricing between Apple and media companies are nothing new. The
technology company typically argues lower prices will help expand a category
and generate more long-term revenue, while studios often worry more about
preserving profit margins and higher prices for higher quality formats.
"I wouldn't tell Apple how to price their iPads," said an executive at one
studio in talks with Apple.
An Apple spokeswoman declined to comment.
Closing deals with studios before Sept. 12 is important to Apple as it tries to
reignite interest in the TV product it first launched in 2007. The company has
been losing market share lately to streaming-media players from rivals such as
Amazon.com Inc. and Roku Inc., which already offer devices with 4K capability
that cost at least 60% less than the $149 Apple TV. Its market share fell to
15% in the first quarter this year from 19% a year earlier, according to Parks
Associates, a market research firm.
The Apple TV accounts for a fraction of the company's revenue, but research by
Kantar Worldpanel has found that owning additional Apple devices strengthens
consumer loyalty to the iPhone, which accounts for two-thirds of sales.
"Historically, Apple has looked at the levers they can pull to be competitive,
and they'll have to have richer 4K content to leapfrog other competitors," said
Matt Smith, vice president at Brightcove Inc., which provides online video
services.
The availability of Hollywood films in Ultra HD, another term for 4K, also
could rejuvenate the iTunes Store. The company's movie rental-and-sales
business has been losing market share to rivals such as Comcast Corp. and
Amazon, falling below 35% from about 50% in 2012.
Ultra HD movies have been available online for less than two years, and an
executive at one studio said pricing is still in the testing phase. An
executive at another studio said $19.99, Apple's preferred price point, would
likely prove more popular with consumers given the vast amount of content
available for $12 or less a month from Netflix Inc., which offers a limited
number of Ultra HD movies and television shows.
Streaming service Vudu, owned by Wal-Mart Stores Inc., already offers some
digital movies in Ultra HD. "Baywatch," from Viacom Inc.'s Paramount Pictures,
and "King Arthur," from Time Warner Inc.'s Warner Bros., cost $29.99 while Walt
Disney Co.'s "Guardians of the Galaxy Vol. 2" is $24.99.
Hollywood's biggest studios, a group that includes Disney, Paramount, Warner,
Comcast Corp.'s Universal Pictures, 21st Century Fox Inc.'s Twentieth Century
Fox, Sony Pictures Entertainment and Lions Gate Entertainment Corp. , are eager
to establish a new category for digital movie sales, particularly as that
business's growth has been slowing in recent years.
Write to Ben Fritz at ben.fritz@xxxxxxx and Tripp Mickle at Tripp.Mickle@xxxxxxx
Corrections & Amplifications
The 4K format offers about 4,000 pixels horizontally, or more than 8 million
pixels per frame, making its resolution about four times that of most
high-definition TVs. An earlier version of this article incorrectly said the 4K
format offers 4,000 pixels per frame. (Aug. 29)
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