Apple, Fox to announce online movie-rental deal

SAN JOSE, Calif. — Apple is preparing to announce next month the long-rumored launch of a movie-rental service through its online iTunes Store, as well as a groundbreaking licensing deal of its anti-piracy technology — moves that could dramatically boost the appeal of digital-movie distribution.

News Corp.'s 20th Century Fox is one of the first studios that has agreed to make its films available for rent digitally through iTunes, according to a Financial Times report Thursday that cited unnamed sources. The deal could be announced Jan. 14 at the Macworld trade show, the Financial Times reported.

Apple also has agreed to license for the first time its FairPlay copy-protection platform so the technology would be built into Fox DVD releases, letting users easily transfer the movies from the disc to a computer or an iPod for playback.

Representatives at Apple and Fox declined to comment.

Apple has been in talks with major film studios over the past year, and analysts have speculated that it was only a matter of time before licensing deals on online movie rentals would be worked out.

Apple already sells permanent downloads of more than 500 films from Walt Disney Co., MGM, Lions Gate and Paramount for $9.99 to $14.99. The Fox rentals will be available for viewing only for a limited time, the Financial Times reported.

Fox and other major studios are already experimenting with digital movies to rent or buy through other online services such as Netflix or Vudu. But the popularity of Apple's online store and iPod media players makes iTunes an attractive distribution outlet, especially as more consumers are expected to latch onto getting entertainment anywhere, from PCs and TVs to handheld gadgets.

"The iPod is the most important media player right now, and if you're one of the studios, you're going to want to play with Apple here," said Michael Gartenberg, a Jupiter Research vice president.

iTunes offers full-length films, but only for sale so far, and consumer interest in movie downloads has lagged behind music purchases.

"People want to watch movies but not necessarily own them," Gartenberg said. "If Apple can simplify the digital-movie services like they did with music, then we're talking about a very significant change in the online-video-rental landscape."

Associated Press business reporter Alex Veiga contributed to this story from Los Angeles. Material from Bloomberg News

also was used in this report.