Apple movie cloud service launches, but without two major studios

Apple Inc. is putting movies in the cloud, providing a boost to Hollywood film studios' small but growing digital business.

Movies purchased through Apple's iTunes Store from five studios -- Paramount Pictures, Sony Pictures, Walt Disney Studios, Warner Bros. and Lionsgate -- will be accessible via the technology giant's iCloud service from any of its devices, including the Apple TV, iPad and iPhone.

Apple announced its plans, which have been in the works since last year, at a Tuesday news conference, where the company also unveiled new versions of the iPad and Apple TV, an Internet-connected device that displays the movies and TV shows from iTunes and other services on televisions.

20th Century Fox and Universal Pictures are not part of the iCloud movies launch. That's because of restrictions in their distribution deals with pay cable channel HBO, said people close to the situation not authorized to speak publicly because of the privacy of negotiations. But both studios are negotiating with HBO and expect to add their films to iCloud soon, those sources added.

In addition to new purchases, the iCloud service will store any movies that users have already bought from iTunes. Previously, Apple customers had to store movies they bought on the hard drive of their computer or other device.

The news is significant for Hollywood because Apple accounts for approximately 75% of all movies bought online, according to one person involved in the digital distribution business but not authorized to share the data. However, the percentage of iTunes movie transactions that are purchased has fallen in the last year, that person said, from nearly 50% to about 33% -- the rest being movie rentals.

Studios are eager to reverse that trend because movie purchases, which typically cost between $15 and $20, are significantly more profitable than rentals for $4 to $5.

Another potential boost to digital movie sales comes from the new version of Apple TV. While the previous Apple TV only allowed movie rentals because it did not have a large hard drive for storage, consumers will be able to buy films on the new version that are stored in the cloud.

Movies in iCloud will likely prove a formidable competitor to UltraViolet, the digital movie technology backed by every Hollywood studio, save Disney, and most major electronics manufacturers, except Apple. Backers have been aggressively trying to grow UltraViolet since it launched last October and expect a big boost next week when Wal-Mart will announce it is supporting the technology in stores and online.

However, the studios apparently concluded that their top priority was growing the digital movie business with Apple on board, rather than only supporting UltraViolet.

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-- Ben Fritz

Photo: "Bridesmaids" on Apple's iPad. Credit: Kirk McKoy / Los Angeles Times

Lost Steve Jobs interview headed to the big screen

Steve Jobs is coming to a theater near you.

Missing footage from an interview Apple co-founder Steve Jobs did almost 20 years for a landmark miniseries that ran on PBS in the United States and Channel 4 in Britain has resurfaced and is the basis for a new documentary that will be shown in Landmark Theatres around the country on Nov. 16 and 17.

Curiosity about the always compelling and enigmatic man behind the Apple computer, iPod, iPhone and iPad has skyrocketed since his death from cancer a month ago. A new biography of Jobs by Walter Isaacson is on top of the bestseller list and a "60 Minutes" show featuring a lengthy segment on the book drew almost 13 million viewers for CBS.

The movie, "Steve Jobs: The Lost Interview," is from a conversation Jobs conducted with Robert Cringely for the author and producer's 1996 miniseries "Triumph of the Nerds: The Rise of Accidental Empires" about the origins of the personal computer industry and the emergence of Silicon Valley as a technology hub.

Although Jobs gave a 70-minute interview to Cringely, only 10 minutes of it were used in the finished product. When Cringely was making the sequel "Nerds 2.0.1: A Brief History of the Internet," he went looking for the rest of the Jobs interview, but the footage had vanished.

"We lost all the raw footage completely," Cringely said in an interview.

Unbeknownst to Cringely, Paul Sen, the director of "Triumph of the Nerds," had dubbed a VHS copy of the Jobs interview and chucked it in the back of his garage in Britain, where it sat collecting dust for years.

After Jobs died, Sen went looking for the interview because he thought it would be interesting to watch. He dropped Cringely a line telling him of his find and suggested that perhaps Cringely could put it on his technology blog I Cringely as a "gift to the world."

"He didn't see any commercial value in it," Cringely said. "I have three kids I have to put through college, so I thought maybe we could sell it."

Cringely sent Landmark Theatres co-owner Mark Cuban an email late one night to see whether there would be any interest in screening it on Landmark screens. Less than five minutes later, Cuban fired back that he was game.

The "Interview," which was in between Jobs' stints at Apple, captures all sides of the complex visionary. Jobs rips into Microsoft and Apple and goes into great detail about how betrayed he felt when he was fired from a company he helped found.

"He was great that day," Cringely said, adding that his emotions are on display. "He was a cranky guy. I think we see that."

There are also lighter moments, including one in which Jobs tells of a prank call he and a friend made to the Vatican pretending to be Henry Kissinger needing to speak with the pope.

The question is whether there is enough interest in Jobs to get people to a movie theater to sit through an interview. "We are all taking a risk here. Maybe no one will come," Cringely said.

It's not an expensive risk, though. The cost to give theatrical quality to a dubbed interview on VHS was only $6,000. Cringely's math tells him he needs only 1,501 people to see the movie to turn a profit and notes that he has a "large extended family."

Besides Los Angeles and New York, "Steve Jobs: The Lost Interview" will be screened in Landmark theaters in 17 cities around the country, including, of course, Palo Alto, where the movie will play for a week.

-- Joe Flint

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Apple prepping movie cloud service

Apple Inc. is preparing to put movies in the cloud, entering a market in which it may be both competitor and ally to a similar offering backed by most Hollywood studios.

Representatives of the iPhone and iPad maker have been meeting with studios to finalize deals that would allow consumers to buy movies through iTunes and access them on any Apple device, according to knowledgeable people who requested anonymity because the discussions are private. The service is expected to launch in late 2011 or early 2012.

The talks come as the first movies from the multi-studio venture known as Ultraviolet are launching this week: Warner Bros.' "Horrible Bosses" and "Green Lantern."

People who buy DVDs or Blu-ray discs for those and other upcoming titles, including Sony Pictures' "The Smurfs" and Universal Pictures' "Cowboys and Aliens," will have access to digital cloud copies they can instantly watch on their Internet-connected TVs, smartphones and tablet computers. Ultraviolet purchases via the Web, without discs, are expected to come in 2012.

Every major studio except Disney is working on Ultraviolet with a large group of retailers and electronics companies that notably does not include Apple.

The studios are eager to boost purchases of movies, which have flat-lined in the face of competition from less expensive video on demand and Netflix and Redbox rentals. Sales of DVDs and digital downloads are still crucial to the studios' bottom line, as they are much more profitable than rentals.

However, despite the increasing popularity of digital distribution, online movie purchases are on track to bring in only $231 million this year, about the same as in 2010, according to IHS Screen Digest.

Storing digital films in the cloud, instead of making buyers manage the digital copy themselves on a computer or other device, could help spur online purchases by making it easier for people to access the movies on any device.

On Wednesday, Apple began rolling out an update to its operating system for mobile devices, called iOS5, which enables users to access music, photos, and some other media from the cloud, but not yet movies.

Though studios have spent years building Ultraviolet, people familiar with the thinking of several studio executives say they'd be happy to see Apple join as well, since it accounts for 66% of online movie sales and rentals.

"This is going to be a huge boost to a struggling online movie business," said Arash Amel, digital media research director for IHS. "Apple is going to make it work right off the bat."

Building a cloud movie business without iTunes would be difficult, Amel noted, as it accounts for 66% of online movie sales and rentals.

Under the plan Apple is proposing, users could stream movies they buy via iTunes on any device the company makes, such as the Apple TV, iPhones and iPads, as well as on PCs.

In addition, though Apple is not part of Ultraviolet, its devices could be compatible. The people who have talked to Apple representatives said the company is considering allowing people who buy and store movies with Ultraviolet to easily watch them on Apple devices via apps. That would be a big help to Ultraviolet, as Apple dominates the market for tablets and is one of the top two players in smartphones.

Movies bought on iTunes, however, would continue to work only on Apple devices and computers.  That's because the company makes its biggest profits on hardware and wants to encourage people to keep buying its digital devices.

A spokesman for Apple declined to comment.

-- Ben Fritz

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Photo: "Bridesmaids" on Apple's iPad. Credit: Kirk McKoy / Los Angeles Times.

as it accounts for 66% of online movie sales and rentals.

Disney's Iger pays tribute to Apple's Steve Jobs

Disney President Bob Iger, perhaps the closest entertainment executive to Steve Jobs, said the Apple co-creator leaves a legacy that will "extend far beyond the products he created or the businesses he built."

Jobs, who died Wednesday at age 56 after a battle with pancreatic cancer, was on Disney's board of directors and was seen as a key advisor to the company on digital strategies. He also, of course, sold Pixar to Disney for more than $7 billion, which made him the entertainment giant's largest shareholder.

"Despite all he accomplished, it feels like he was just getting started," Iger said in a statement released by Disney.

Jobs played an instrumental role in the television industry's move to migrate content from the big screen to the computer screen, the iPod and most recently the iPad. In 2005, it was Jobs who cut a groundbreaking deal with Walt Disney Co.'s ABC to sell ABC programs on iTunes just one day after the episodes had aired on the network.

Jim Gianopulos, the co-chairman of News Corp.'s Fox Filmed Entertainment unit, said that "Steve's genius transformed the way we work, play, live and think" and that Jobs will "remain an inspiration forever."

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-- Joe Flint

 Image: A screen shot of Apple's home page. Credit: Reuters

Apple discontinues 99-cent TV rental program

Apple Inc. has pulled the plug on its 99-cent rentals of television show episodes after making a push last year to persuade TV networks to sign on to the low-price plan.

Consumers, the company ultimately discovered, were just as willing to pay $1 or $2 more to purchase an episode -- even when presented with the discounted rental option.

“iTunes customers have shown they overwhelmingly prefer buying TV shows,” Apple said in a statement Friday. The company said the introduction of the iCloud service allows customers to store content they’ve purchased online, then watch it whenever they want on any Apple device.

The 99-cent download program faced too many hurdles, said Mike Vorhaus, president of Magid Advisors. It required people to have an Apple TV device to view the episodes on their living room TVs, or be forced to watch the programs on a much smaller screen.

“It's very simple. People want to watch shows on their TVs -- not on their computers,” Vorhaus said. “Besides that, the competition is intense and much of the competition is free.”

From the beginning, the 99-cent rental struggled for traction. Major television studios, including Warner Bros., NBCUniversal and CBS, refused to offer popular shows through Apple at such a discount. They didn’t want to set such a low price point and undermine the still-nascent market for digital purchases.

Apple's former Chief Executive Steve Jobs lobbied aggressively a year ago to get the television industry onboard, but only Walt Disney Co.'s ABC and News Corp.'s Fox signed up. Jobs stepped down as CEO this week, to serve in a more limited capacity as the company’s chairman.

ABC had an incentive to participate because Jobs is Disney’s largest shareholder. News Corp. Chief Executive Rupert Murdoch agreed to experiment with the 99-cent downloads because he was interested in launching his company's digital news magazine, The Daily, which runs on Apple's iPad.

“After carefully considering the results of the rental trial, it became clear that content ownership is a more attractive long-term value proposition both for iTunes customers and for our business,” a Fox spokesman said in a statement.

News Corp. Chief Operating Officer Chase Carey was more blunt earlier this month during an earnings call with analysts.

“We want to make sure we are vigilant about attacking practices that undervalue our product, like $1 rentals,” Carey said. “Our priority [is] just to make sure we’re thoughtful and do not allow a quick buck to jeopardize the longer-term value of our product.”

-- Meg James

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Apple's Steve Jobs revolutionized TV too

 
The first thing that usually comes to mind when one thinks of Apple Chief Executive Steve Jobs is the iPod, which revolutionized how people listen to music.

But Jobs, who announced on Wednesday afternoon that he is stepping down as CEO of Apple, should also get a lot of credit for changing the way we watch TV.

Back in 2005, it was Jobs who cut a deal with Walt Disney Co.'s ABC to sell ABC shows on iTunes just one day after the episodes had aired on the network. The deal was considered groundbreaking at the time and caused a lot of concern in the television industry, particularly among ABC affiliates, who sent a letter to the network expressing anger at the agreement and at the fact that ABC had not consulted them on it.

The fear was that if viewers opted to watch shows via iTunes, ratings for the network and its stations would fall and the backbone of the television industry would collapse.

Apple's new offering "is really bad" for affiliates, Forrester Research analyst Josh Bernoff told the Wall Street Journal at the time. "You don't get anything. You just get a smaller audience," he said. (Full disclosure, this reporter co-wrote the Wall Street Journal story on Apple's deal with ABC.)

What Jobs and Disney knew was that new platforms were emerging that would become just as important as the television in the living room and the networks would only be hurting themselves if they ignored them.

But Jobs' and Disney's deal also was the beginning of the end of appointment television. While the VCR and later the DVR already started to free viewers from being held hostage to network schedules, iTunes and the platforms that followed took it to the next level.

While it is true that the rise of Apple's various devices and the decline of network television ratings is not a coincidence, those devices also have helped create new revenue streams for Hollywood as well. All the evidence you need is a visit to the gym, where many watch old shows on their iPads while working out on the stairmaster. Studios and networks now have new ways to sell reruns of their shows, especially the cult programs that never developed a big enough audience to make a killing in the traditional rerun market.

Hollywood still hasn't figured out how to offer its content on all these outlets without cannibilizing its own business. Eventually it will, but not without a few other forward thinkers like Jobs.

-- Joe Flint

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Wal-Mart adds streaming video to its website

Wal-Mart Stores Inc. has added streaming movies to its website as the world's largest retailer attempts to grab a bigger share of the online movie market from rival service Netflix Inc.

The decision to offer movie sales and rentals through Walmart.com comes just two weeks after Netflix raised prices for the majority of its customers. The price hike provoked howls of protest from consumers and disappointing subscriber growth projections, leading to a significant drop in Netflix's stock price.

Wal-Mart, long the nation's leading seller of DVDs, signaled its intent to double down on digital movie distribution in February 2010, when it spent a reported $100 million to acquire Vudu, a Silicon Valley start-up that was gradually being added to home entertainment devices.

Since the acquisition, Vudu has been able to leverage the giant retailer's clout with manufacturers to incorporate is service into more than 300 consumer electronics products, including Internet-connected television sets, Blu-ray disc players and the Sony PlayStation 3 game console.

This spring, Vudu began offering movie rentals and purchases via the Web, through Vudu.com, positioning the service to better compete with the likes of Amazon.com, Apple Inc.'s iTunes or Blockbuster.

Offering 20,000 movie titles for rental and purchase through Wal-Mart's website, which attracts about 40 million monthly visitors, is a further step in that direction. It better positions the retailer to take on established online players, as well as traditional competitors such as Best Buy, which last may bought digital video service CinemaNow.

On Wal-Mart's website, the movies will be available the same day the DVDs go on sale in stores. Rental prices range from 99 cents to $5.99. Digital purchases are priced from $4.99 to $24.99.

Walmart.com general manager Steve Nave said the retailer is following its customers as they increasingly embrace digital movie rentals and purchases.

"We know customers are starting to shift their behavior, in terms of how they consume their media," Nave said, adding, "As as customers make that change, we don't want to lose that customer as they shift to digital."

Wal-Mart has been a laggard in the digital space, vying for third place with Sony's PlayStation Store and Amazon's Video-on-Demand. Its Vudu service currently accounts for fewer than 10% of all transactions -- and even less revenue, because of its 99 cent promotions, according to researcher IHS Screen Digest.

"iTunes is the market leader in this field, accounting for approximately 65% of all movies and TV shows bought or rented over the Internet," said Arash Amel, IHS's digital media research director.

Amel doubts that incorporating the Vudu service on Wal-Mart's site will move the needle, in terms of market share. Consumers have shown through the failures of other services that they don't want to watch movies on computers.

"The real strategic significance here is this is the fist step in the retailer trying to once more figure out how online video can add any meaningful value to the e-commerce components of its core business of physical goods," Amel said.

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-- Dawn C. Chmielewski

Photo: A screen shot of the film "True Grit" is shown as one of the titles available on Wal-Mart's new video-streaming service. Credit: Associated Press / Wal-Mart Stores Inc.

Apple Inc. in preliminary talks to acquire Hulu

Apple Inc. has joined a handful of companies, including its chief rival Google Inc. and online portal Yahoo, in weighing a potential offer for video service Hulu, a person with knowledge of the situation confirmed.

The discussions are still in the early stages, said that individual, who requested anonymity because the negotiations are confidential.

Apple spokesman Steve Dowling said the company would not comment on rumors or speculation. A Hulu spokeswoman similarly declined to comment. The discussions were first reported by Bloomberg News.

Hulu has emerged as one of the leading sites for watching TV shows online, attracting about 28 million monthly visitors, according to measurement firm ComScore. Its media owners, News Corp., Comcast Corp.-owned NBCUniversal and the Walt Disney Co., have opted to put the service up for sale, in part because its success was creating conflicts with existing business arrangements, but also to capitalize on the hot investment climate for technology companies.

The site could fetch a price as high as $2 billion, according to banking estimates.

Hulu offers a radically different proposition to consumers than is available now through Apple's iTunes store, which sells episodes of TV shows for $2.99, and, in some cases, offers a 99-cent rental. Hulu, by contrast, allows viewers the ability to watch current TV shows online for free -- but with advertising included. A subscription service, Hulu Plus, offers a broader selection of programs that can be viewed on more devices for a monthly fee of $7.99.

One media analyst said consumers simply haven't gravitated to Apple's TV rental model.

"The natural model for distributing TV shows is ad-supported or subscription, not on an individual program rental basis, nor even the episodic purchase model," said Arash Amel, IHS Screen Digest's research director for digital media.

"Subscription and advertising is what the TV consumer is familiar with, and any digital platform will have to replicate that model to succeed [in the] mass market," Amel suggested. "That is as true for Apple as it is for any other technology company seeking to provide TV content."

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Major labels, music publishers lining up behind Apple's iCloud

Apple Inc. has just sewn up its contracts with the four major record labels Thursday for a cloud music service, with agreements from music publishers to follow on Friday, according to sources familiar with the negotiations.

Dubbed iCloud, the service initially will be offered for a free period to people who buy music from Apple's iTunes digital download store, allowing users to upload their music to Apple's computers where they can then play from a Web browser or Internet-connected Apple device.

The company plans to eventually charge a subscription fee, about $25 a year, for the service. Apple would also sell advertising around its iCloud service.

The agreements, finalized this week, call for Apple to share 70% of any revenue from iCloud's music service with record labels, as well as 12% with music publishers holding the songwriting rights. Apple is expected to keep the remaining 18%, said people knowledgeable with the terms.

Music companies that have signed on to iCloud include Warner Music Group, EMI Music Group, Universal Music Group and Sony Music Entertainment. Representatives from the four companies could not be immediately reached for comment.

though the service is initially focused on allowing consumers to store their music on Apple's servers, the Cupertino, Calif., technology company ultimately envisions the service to be used for movies, TV shows and other digital content sold through iTunes, said a person knowledgeable of the company's plans.

Apple, whose iTunes music store is the dominant purveyor of music downloads with between 75% and 85% of the market, has been carefully monitoring moves by rival Amazon.com as well as newcomers to the digital music space, including Google and, in Europe, Spotify.

Amazon pounced first in March when it launched a music "locker" service, dubbed Amazon Cloud Player, that lets users upload their music to Amazon's computers and listen to their songs from any browser. Google followed suit in May with its Music Beta service.

-- Alex Pham

For the Record: This post has been updated to correct an error in the revenue splits between Apple, music labels and publishers. 

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Apple making its move into cloud music

Preparing to launch its own "cloud music service," Apple Inc. has reached tentative agreements with all four major record labels that would allow users to listen to songs from an Internet connection.

It is unclear whether the Silicon Valley company has actual contracts with those labels -- Warner Music Group, Sony Music Group, EMI Group and Universal Music Group -- or whether details of the agreements are still being ironed out, according to people familiar with the negotiations.

Representatives of the four labels declined to comment. CNET reported last week that EMI had signed on to Apple's service.

Apple, whose iTunes music store is the dominant purveyor of music downloads with between 75% and 85% of the market, has been carefully monitoring moves by rival Amazon.com as well as newcomers to the digital music space, including Google and, in Europe, Spotify.

Amazon pounced first in March when it launched a music "locker" service, dubbed Amazon Cloud Player, that lets users upload their music to Amazon's computers and listen to their songs from any browser. Google followed suit in May with its Music Beta service.

With Amazon and Google launching music locker services in the last two months, Apple was starting to feel pressure to make its own move, said people familiar with the negotiations between Apple and the music labels.

Apple's service would differ from Google's and Amazon's in one key respect -- it would have the requisite licenses from all the major record labels, whereas Google's and Amazon's are unlicensed services.

For users, this can make a huge difference. To get around copyright rules, Google and Amazon must require users to upload their song collections, a process that can take hours or even days. With the appropriate licenses from music publishers and songwriters, Apple can simply scan a user's collection and make all of those songs available within minutes for them to listen over an Internet connection via Apple's computers.

Hundreds of millions of consumers already use iTunes to buy, store and organize their music collections, making the practical task of creating a cloud service almost trivial for Apple. The company also has the advantage of having the credit card information for more than 200 million customers who regularly purchase digital music or apps for their iPhones or iPads.

Apple may unveil a cloud service as early as June 6 in San Francisco, according to people close to Apple. That's when the company holds its annual developer conference, where last year it introduced Ping, a social network focused on music. The timing of the launch would depend on how soon Apple can button down its contracts with the major labels and publishers, sources said.

Google in particular has been frustrated by its attempts to negotiate with record labels for a licensed cloud service. At an event last week to announce the service, Google said music executives have been "unreasonable and unsustainable" in their negotiations. But label executives said Google was not able to provide enough assurances that the Mountain View, Calif., search giant would help the industry curb music piracy.

It's unclear how Apple cleared those hurdles with the labels. Calls to Apple were not immediately returned.

Apple's cloud service may work through the company's existing MobileMe service, which already lets users upload files to Apple's computers so they can access them on any Mac computer with an Internet connection.

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-- Alex Pham