Apple and Hollywood studios are once having difficulty coming to terms for movie distribution, this time concerning pricing for the offering of 4K “Ultra-HD” content on the iTunes Store. Confirming rumours of a new 4K-capable Apple TV, a new report from the Wall Street Journal reveals that Apple has been “scrambling” to strike deals with the studios to ensure content is available on the new set-top box when it’s expected to launch next month. However, perhaps unsurprisingly, Apple has met resistance from the Hollywood studios in terms of what should be an acceptable price at which to offer ultra-HD content, with Apple pushing to sell movies at a standard price of $19.99 — the same price the company currently charges for new release HD movies — while Hollywood studios want to add a $5 to $10 premium for higher-definition 4K content.
This is not the first time that Apple and media providers have been at odds with pricing, with Apple’s usual push for lower prices as a longer-term revenue move running up against studios’ concerns about preserving their profit margins and sticking to higher prices for higher-quality formats. Further, it’s a common perception from Hollywood studios that Apple shouldn’t be bargaining for prices in the first place, but should simply go with what the studios offer — as one studio executive involved in the talks puts it, “I wouldn’t tell Apple how to price their iPads.” For its own part, Apple naturally declined to comment on the talks.
While the Apple TV accounts for only a fraction of Apple’s revenue, research reports have suggested that it plays an important role in terms of strengthening customer loyalty to the Apple ecosystem, and the iPhone in particular, the latter of which accounts for two-thirds of Apple’s sales. With Apple TV and iTunes Store market share being lost to competing streaming-media players and services, the company obviously hopes that getting a 4K hardware and content solution in place will help reignite interest in the company’s set-top box and content platforms. Studio executives have acknowledged that with Ultra HD movies being relatively new — they’ve been available online for less than two years — pricing is still in the testing phase, and Apple will of course also be bumping up against streaming services such as Netflix, which is already offering a limited number of Ultra HD titles as part of its top-tier $12/month subscription.