The rumor mill surrounding Apple's movie streaming cloud service, believed to be called "Replay," is heating up. It is not unlike any other Apple rumors that make their way around the Internet - it is coming, it is not coming, what will it look like when it comes? The latest on the rumor line is that Replay is not coming any time soon. It is not a matter of technology. Apple's iCloud and data centers can handle movie streaming. With everything in the premium content business, it is about licenses.
CNET has an in-depth report on what is happening between Apple and the major movie studios. Essentially it comes down to negotiating rights and who controls them. For half of the major studios (Warner Bros., Fox and Universal) that would be HBO owned by Time Warner. HBO has the legacy "first-mover" advantage because of its longstanding relationships with the studios and cable operators. Hence, HBO holds the keys for Apple or any other would-be cloud streaming services, from bringing a flood of streaming movies to the masses.
HBO & Time Warner Not Going To Give Up Advantage
HBO is a powerful brand and controlled by a powerful player in the media ecosystem in Time Warner. It is not going to give up its first-mover advantage lightly. Yet, when it comes to content licensing, the studios might want to rethink their position when it comes to allowing HBO an exclusive window for content.
Think of it this way - all the major tech companies, telecom/satcom operators (like Comcast, Cox, DirecTV, Verizon, AT&T) and media companies (think Netflix, Hulu) want to get their fingers into the digital streaming pie. This creates a huge new market for the networks and studios to license content for cloud streaming.
Call it the Netflix Effect. With 24 million subscribers, international expansion and growing revenues, Netflix is fundamentally changing the way that consumers interact with premium media on the Web. As such, Netflix has the first-mover advantage and so far the tenuous support of the studios to create a deep library of movies to stream and international licensing rights.
Yet, HBO is a big thorn in the side of Netflix and all the players (and would-be players like Apple). That is why it was a big win for Netflix to come to a content distribution license with DreamWorks Animation in late July as it signaled a shift in how the studios handle exclusive HBO exclusive agreements.
Stunted Cloud Streaming Growth While "HBO Window" Exists
Yet, with HBO's agreements with three major studios, it makes it difficult for other companies to move into the space. According to the CNET report, HBO is acting out of self-preservation. It does not want to see rivals come in and sell pay-per-view movies or other subscription-based services in its window. It makes perfect business sense for HBO. Its contracts pre-date cloud streaming and now that streaming has become a multi-billion dollar industry it has to adjust. If that means being stubborn with its contracts and agreements, it is what is best for the company.
Yet, those agreements probably only have a couple more years left on them. If the Netflix/DreamWorks deal is any indication, then HBO has contracts that run anywhere between 2013 and 2016 (in theory). Studios, for the benefit of their bottom lines, might want to lump HBO in with the rest of the content distributors and license content to each player individually.
Until that time, Apple's Replay and the rest of the cloud streaming market will be stunted.