Apple, where are the rentals?

UPDATE: Officiality

Well, by now is seems pretty obvious that Apple isn’t releasing anything huge before Christmas.  From what we’ve heard, just about everything in the Macintosh lineup is scheduled to get a hit at Macworld (more on this to come soon).  iPods are staying put for awhile and the iPhone won’t see revision 2 until around May – in time to ship in Asia.

That leaves the AppleTV line – Apple’s "hobby".  What could have been a huge product this Christmas is turning into a dud.  Why?   The technology is there.  We’ve all seen the hidden tidbits inside iTunes that allude to movie rentals.  It is ready to roll.  The infrastructure is also in place.  People downloading Purple Violets (>1GB) reported  it came in at under 15 minutes – much faster than the average trip to Blockbuster and with no winter clothing to put on or car fuel to burn.

The roadblock is that the studios aren’t budging.  Perhaps wary of what is happening in the Music Industry or perhaps burdened with the writer’s strike, they haven’t made the deals to get on iTunes like Apple had hoped.  Additionally, the entertainment industry is this time hoping to roll their own movie rental services – or at least have a few more players out there so as not to give Apple as much power as it has in the Music business.  TV shows from NBC also aren’t running on iTunes anymore.  Will other networks follow?  Not likely but they could.   Should all of this be cause for concern?  Perhaps.

Over the past few weeks, the studio bosses have been reversing course and praising apple again.  Warner Chief, Edgar Bronfman recently got caught praising Apple’s iPhone and iPod lines.  Jon Gruber at Daring Fireball reports on  Doug Morris‘ admission that the Entertainment industry had/has no idea what they are doing technology-wise.  In fact they were so stupid that they couldn’t even know who was smart enough to hire to figure it out.  That is Calculus Integral stupid – and it seems about right. Quote:

"There’s no one in the record industry that’s a technologist," Morris explains. "That’s a misconception writers make all the time, that the record industry missed this. They didn’t. They just didn’t know what to do. It’s like if you were suddenly asked to operate on your dog to remove his kidney. What would you do?"

Personally, I would hire a vet. But to Morris, even that wasn’t an option. "We didn’t know who to hire," he says, becoming more agitated. "I wouldn’t be able to recognize a good technology person — anyone with a good bullshit story would have gotten past me."

The movie industry might be a bit smarter (no one can be this dumb can they? – I mean they could have enrolled in some classes at NYU?) and has had some more time to watch things unfold.  Rather than give up such an important part of the value chain right away, they are willing to hold out longer.  But is this actually smarter?  People aren’t really into waiting for technology when better means exist – even if its legality is, shall we say, questionable.

While the movie studios wait on Internet movie rentals, more and more people are becoming familiar with the BitTorrent clients – some are even going mainstream like Vuze.  They are buying multi-terabyte mediacenter hard drives that can hold thousands of regular definition moves and hundreds of high definition movies.  People are getting higher speed fiber to the home and 100mb cable is being rolled out in limited areas. 

Movies are getting to the Bittorrent sites faster.  Most movies hit Bittorrent before they hit the rental shelves.  sometimes they are even out before they are in theaters.  While a lot of times these are poor quality camcorder or Oscar voter-type copies, if you wait long enough, most movies come out in DVD quality.  Some you may even see in HD. 

Of course people have alternatives.  They can go to Blockbuster or send away to Netflix and get their movies slower, more costly way.  But given the opportunity to do it better, more and more people are turning into pirates.  Just like the music industry did when Napster went mainstream.

So maybe the movie studios ARE dumber than the record labels?  At least the record labels didn’t have a precedent to follow.  Apple, of course isn’t hedging its bets on AppleTV.  It is, after all, just a hobby.  But how long will Apple leave this device out there dangling when it could be making mega huge hard drive media centers that can store thousands of movies?  Maybe we’ll find out at Macworld.

The window of opportunity is closing on AppleTV – but more importantly, it is closing on the movie studios who obviously don’t get technology or its implications on their business.