Online video rentals coming to iTunes?

Apple is reportedly trying to broaden its movie offerings by adding online film rentals to complement digital movie downloads that are already sold at Apple's iTunes store. The move would put Apple to compete head-to-head against BlockBuster, NetFlix and other cable and satellite television operators offering on-demand video.

Though licensing talks with Hollywood film studios are still preliminary, the service is speculated to launch as early as this fall with movies available for a 30-day period at a cost of $2.99. Movies would include Apple’s copy protection software to prevent piracy, while allowing the online films to be downloaded onto a computer and transferred to one other device, such as an iPod or an iPhone.

But that price raises questions for the studios because it would significantly undercut what consumers now pay for online rentals of new releases, which can cost up to $4.99. Moreover, the price might cannibalize pay-per-view revenues the studios already receive from cable and satellite TV.
Apple currently enjoys distribution deals with Disney and Paramount; meanwhile other studios have been slow to join, unwilling to see any decrease in the DVD format’s high profit margin.