Apple jumps into online movie rentals

Apple joined the highly competitive arena of movie rentals, announcing deals with all the major studios and a new set-top box that is not connected to a computer.

At the annual Macworld Expo trade show, Steve Jobs announced that Apple is adding movie rentals from all the major Hollywood studios to its iTunes download service. He said that more than 1000 SD and about 100 HD movies would be available by the end of February.

He also unveiled a sequel to Apple’s year-old, unsuccessful AppleTV — a set-top box designed to play those movies on an HDTV set. The older version of AppleTV, introduced last year, required a computer connection. The newer version connects directly to the Internet and allows consumers to select movies and TV shows to watch directly from their TVs.

“We’ve all missed. No one has succeeded yet,” Jobs said of the industry wide effort to marry the Internet and the television. “We learned that what people really wanted was about movies, movies, movies. And we weren’t delivering that. So we’re back.”

Microsoft, Netflix and Vudu are also trying to stake a part of the digital movie business. At the same time, cable and satellite companies are expanding their own on-demand offerings. Comcast, one of the nation’s largest cable companies, said at CES that it would have 6000 movies available on-demand by next year, with half of those in HD.

Cable and satellite companies may be in the best position to deliver on the future marriage of the Web and the television because their set-top boxes already sit in millions of homes.

However, no company has given consumers an extensive library to choose from or provided a convenient system, as Apple did with music on iTunes. Apple’s offering is not a radical departure from what its competitors offer. It will charge $3.99 for new releases, $4.99 for new releases in HD, and $2.99 for older movies in SD.

Consumers can store the movie for 30 days, but can only watch the movie for a single 24-hour period once they start. The new releases will not be available on AppleTV until 30 days after they have been made available for sale as DVDs. Other rental services face a similar 30-day delay.

The second version of AppleTV may give the company some advantages. It is the smallest, most portable of the set-top box options and has the benefit of working with the same digital format as the millions of video iPods that Apple has sold.

Tom Lesinski, president of Paramount Pictures Digital Entertainment, said the Apple movie service would be a significant litmus test for the idea of downloading movies on the television. “All the barriers that have existed with other solutions pretty much go away now,” he said.