iTunes Replay has been the target of several reports claiming that it will be delayed. Few have said much outside of the fact that the whole cloud-based movie and TV streaming service seems to hinge on contracts with the six large Hollywood studios. Well, it now seems that HBO, part of Time Warner, is what might be holding things up.
Why you ask? Well, first off, it’s HBO, that should be enough. This is the pay-cable company that requires you to have a subscription to their channels so you can stream the content online (LAME!).
HBO, Gatekeeper to Movie Studios
HBO is also the gatekeeper to several other major studio properties for digital delivery (according to CNET) including 20th Century Fox , Warner Bros and Universal.
What seems to be going on is that HBO has first option on exclusive electronic distribution. This means that no legal digital distribution of any kind can be done without consent of HBO.
While it might seem strange that a cable channel has those rights, you have to think about it in the historical sense and the fact that HBO generally does get first air on many films, meaning they thought ahead to include this into their contracts.
It’s also probably why HBO Go is cable-channel-subscription-restricted. They are protecting their own window and subscription base by making sure you cannot, ever get those films anywhere else, without paying them their pound of flesh.
Well, that, and they paid a lot of money for those rights and want to make sure they get a return (or a continuing return) on those payments as well as continue to be in a position to profit from them in the future. So they won’t go frivolously offering up contracts that would then compromise their ability to be a competitor in the future.
Enter Apple, who suddenly wants to sign contracts with the six majors, including the three that HBO is the gatekeeper for, and you see their dilemma.
HBO needs to maintain the price point from how they see it. They don’t want to be undercut which could then eat into their profits, especially not because they softened on their position and allowed someone to go ahead with a service that, while not competing direct with them in the beginning, eventually evolves to do so. It’s just plain business smarts.
On the part of Apple, they might threaten that if HBO doesn’t play ball for the Replay service, they can’t have their content on the iTunes store. It would be a risky gamble on Apple’s part since HBO does have a large amount of content there and pulling it all in hopes of bluffing their way into the HBO digital distribution window, could backfire and not only mean a serious depletion of the video library, but also serious consumer backlash.
What About the Other Big Three Studios?
The others probably won’t be so hard to persuade. First off, Steve Jobs owns a lot of Disney, so that deal is all but done, really. Second, Sony loves digital distribution and needs all the cash they can get after three consecutive losses, this year being around $3B in the red. Finally, Paramount, part of Viacom, might simply take a Sotheby’s approach to it all and let all the streaming services, cable and satellite operators duke it out in a no holds barred auction for the licenses to their content.That could stand to be a major windfall for them, and in the meantime, while they all fight over it, Paramount can just make the cash on their current deals or offer up the content themselves.
Benjamins Down the Rabbit Hole
Let’s face it, this is all high-tech meets Hollywood and anytime these two sit down to the tea party, it’s going to be numbers exponentially larger than the Mad Hatter’s hat sizes. While dealing out sugar to one company, someone like Apple might also be slipping something noxious into the cups of others just to make sure they have the upper hand when the queen walks up and yells Off with their heads!
Honestly, the only real losers I see here are the consumers as we have to wait while they all sip their tea, eye up the competition and get down to the basics of it: money. Then, regardless of what they come up with, they will turn to the consumers with hands stretched forth and expect payment because, after all, they’re obviously doing us a favor with all of this, right?
Yet, I still can’t help but wonder, do we even need YAVSS? As in ‘Yet Another Video Streaming Service,’ pay-per-view, subscription or otherwise. Honestly, how many places do we need access to Loverboy, Dirty Dancing and the Last Action Hero?