Fox, iTunes Strike Deal For Online Movie Rentals

Looking to adjust to consumer slowdown of online movie needs, News Corps' Fox and Apple Computer's iTunes Music Store have struck a deal allowing for Internet rentals of movies.

Some studios already work with iTunes to enable consumers to purchase movies. This includes Walt Disney, which allows its current titles to be bought online, as well as Paramount, MGM and Lionsgate, which sell their back library titles.

The news of the story was broken by The Financial Times on Thursday. Neither Fox or iTunes executives are commenting about the story.

Retail prices were not disclosed concerning the Fox-iTunes movie rental deal--only that consumers would be able to view downloaded movies for a limited time. But analysts sense that the current retail price for purchasing movies online is too high. For example, it's $9.99 at iTunes. This is part of the reason, they say, why the Internet film downloading segment has lagged behind that of music and shorter-length video such as TV episodes.

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Media companies have wanted more flexibility from Apple in pricing policies. NBC recently decided to end its relationship with iTunes because of Apple's reluctance to allow NBC to package its TV shows with alternative pricing to Apple's standard $1.99 a download price.

In-store rentals of movies have been slowing for some time. Two major rental distributors, Netflix and Blockbuster, have been feeling the pinch.

On the news, shares of Netflix were down 4.1% to $27.54 on Nasdaq. Shares of Blockbuster were down 5.5% to $3.95 on the New York Stock Exchange.

It is expected that Apple will announce the deal at the MacWorld conference on January 14th in San Francisco.

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