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Apple TV's delayed gratification - January 15, 2008

Updated at 6:20 EST: Some initial observations about today's Macworld news concerning Apple TV 2.0 and the new iTunes Movie Rental store:

1. Deal Points: As bad as the DVD business was over the fourth quarter, the studios clearly are still concerned about not making it worse. Thus, iTunes will have to share a window with traditional video-on-demand and pay-per-view, not DVD. Scuttlebutt is that some studios were willing to go day-and-date but not all, and Apple needs all to be competitive with Netflix, Blockbuster and other rental options. For a change, Apple had to settle for second-best. Apple's insistence on offering high-def movies no doubt weakened its case for a day-and-date window with DVD, particularly with Sony, which isn't going to do anything to undermine the appeal of Blu-ray Disc, especially now that it smells victory in the optical disc format war. Other studios probably share that concern.
2. Set-Top Land Grab: Eliminating the need for a PC to get movie rentals to the Apple TV set top is a critical step, but the track record for single-purpose, Internet-connected STBs still isn't great. They have to compete with DVD players for screen time and access, and their later window, generally higher cost and sometimes-imperfect viewing experience hold a lot of downside. If anyone can make it work, though, it's Apple, especially if it plays the high-def card right.
3. Portable Pitch: Getting the studios to allow rental movies to move between devices at no additional cost to the consumer is a huge win for Apple and a huge problem for Blockbuster and Netflix, whose DVD-based rentals cannot (legally) be ripped and moved. It could also further cement the iPod as the portable device of choice for rental movies, which is a problem for anyone without access to Apple's DRM. Which is everyone.
4. Missing in Action: The only studio executive quoted in the iTunes Movie Rentals press release is Fox Filmed Entertainment chairman/CEO Jim Gianopulos, who touts consumers' new ability "to watch wonderful movies from Fox and the other major studios whenever and wherever they want, be it on their computer, TV, iPod or iPhone." Not mentioned in the release, however, is any agreement to incorporate pre-ripped, FairPlay-encrypted files on Fox DVDs for transferring to an iPod. Fox has shown the greatest interest in the idea among the studios and Media Wonk (among others) was more or less expecting to hear something on it. Maybe that's still coming.

Investors sent Apple shares down 4.3% on the day.

UPDATE: Oops. Media Wonk is apparently blind as well as bewildered. Fox and Apple have, in fact, announced a deal for iTunes Digital Copy on Fox DVDs. First title to carry the pre-ripped file will be the DVD Special Edition of "Family Guy Presents: Blue Harvest." Press release is here.
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