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Fox Movies for your iPod, iPhone and Apple TV

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According to the Wall Street Journal, which is owned by News Corp., which also owns Fox, Fox is getting ready to rent movies to Apple’s iTunes users. This come as no great surprise since Apple has been planning on going into the movie rental business for months now.

The story doesn’t go into any details. For example, will they sell Fox movies as well? Will they be available in HD (high definition)? And, that all important question: How much?

Here’s my two cents on what the answers are going to be. First, of course, you’ll be able to buy Fox movies as well. Come on, you think they’re going to turn down your money? I don’t think so!

Apple’s FairPlay DRM (Digital Rights Management) system, which according to the WSJ, will also be used on Fox DVDs, is about as unbreakable a DRM system that’s out there. So, from a studio’s viewpoint, it’s safe to sell movies via iTunes.

Will Fox be renting and selling movies in HD? I suspect they will. Historically, Fox has always pushed for more powerful DRM. That’s one reason why the studio supports Blu-Ray. HD-Video uses AACS (Advanced Access Content System for DRM, while Fox wanted the option of adding stronger DRM. That, of course, is where FairPlay comes in.

FairPlay’s use also indicates that it will be possible to legally upload movies from Fox DVDs into your iTunes library. What this means for pricing is that I think ordinary iTunes movies will continue to sell for an average price of $14.99 for first-run movies, while HD movies will sell for about $20.

Why so much less? Let’s look at the numbers. Fox’s Blu-Ray movies list for about $40. No one pays that much though. Amazon, for example, sells Fox’s 28 Days Later, an older, well-regarded horror flick and last summer’s action blockbuster, Fantastic Four: Rise of the Silver Surfer for $27.95. That’s par for all the HD movies.

Apple, however, has always insisted on pushing prices down. After all, with video downloads, there’s no packaging, warehousing or distribution costs to speak of. By passing on some of the savings to customers, Apple has already shown that it can cut down on audio piracy—why steal when it’s so cheap?—and that customers are perfectly happy to get their music online rather than go to a Wal-Mart or Best Buy to buy a CD. Apple’s Steve Jobs believes that the same will hold true for video.

Finally, the Apple TV is the only device that can show HD at this time in the Apple line-up and its top video output is 720p. Blu-Ray, however, can go up to 1080p. You may also have noticed that during the 2007 holiday seasons many stores were selling cheap TVs that max out at 720p. I see quite a nice little HD market growing in ordinary, living room movie-watching.

Get the picture? On the one hand, Apple and Fox can sell and rent 720p video to price-conscious viewers. On the other, Fox can sell HD via iTunes without hurting Fox’s high-end customer base who have bought into 1080p home theaters and Blu-Ray players. I could be wrong, but I think my theory fits rather nicely into what we already know about Apple and Fox’s video plans.

We’ll find out if I’m right come January 14th at MacWorld in San Francisco. Then, when Steve Jobs unveils Apple’s 2008 plans, we’ll know exactly what the future holds for the Apple TV, iTunes, and Fox.

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