Apple in talks with News Corp over US99c television rental service

Tech giant Apple is in discussions with News Corp to offer US 99c rentals for individual episodes of television shows in order to prepare for its upcoming iTV device, designed to replace the existing Apple TV product, new reports suggest.

Rumours of a new Apple TV product have spread across the tech industry over the past few months, with reports suggesting the new device will be the size of an iPhone, will have similar hardware and cost just $US99.

As reported by Bloomberg, Apple is in “advanced talks” with News Corp for a new service that would allow users to rent episodes for 99c each. Other media companies including CBS and Walt Disney are also involved in talks, according to “three people familiar with the plan”.

The sources also suggest Warner Bros. is likely to give Apple the rights to its wide catalogue of television shows.

The deal would allow users to rent those shows for 48 hours, similar to the rental deals already available on the iTunes store for films. Episodes would be made available just one day after they are broadcast.

The new deal is apparently born out of an abandoned plan to create subscription television services with some of the major cable television networks, including Fox, NBC, CBS and ABC. Reports suggest the cable companies feared users would simply abandon their plans, which are based on monthly subscriptions, and instead pick out their favourite shows from the iTunes store to save money.

Nevertheless, the 99c rental plan would likely attract users wanting to move away from cable. As TechCrunch points out, much of the fee would likely be given to the cable companies to make up for lost advertising revenue.

Analysts also suggest such a rental plan would help Apple combat online rental firm Netflix, which is continuing to grow market share, along with Amazon which is already beginning to offer some video products.

Apple already offers television shows for purchase, but these are expensive and high-definition versions take up a lot of storage room. The rental service would be a push towards cloud-based entertainment, and would be more attractive to users with low amounts of hard disk space.

Apple is planning an event for September 7 in San Francisco, the report suggests. The company usually upgrades its iPod line-up around this time of year, and this would be the perfect opportunity to launch any new type of rental service and Apple TV product – two weeks before the new primetime season begins.

The new version of Apple TV, reportedly called the iTV, will be smaller and have less hard drive space than the current version, but would also run on the iOS software allowing it to use apps. Some reports suggest the device will cost just $US99.

Some reports also indicate Apple will launch a new cloud-based iTunes service that will allow users to listen to their music library in any web-enabled browser, effectively negating the need for high-capacity storage in iPods and iPhones.