Apple kills iTunes television episode rentals amid Hulu acquisition

Apple has removed TV rentals from the iTunes Store amind a week of disappearing acts for the company. But this time it points to a possible addition the form of rival Hulu. The unexplained move, conducted on a Friday evening which typically suggests that a company is looking for as little publicity for the move as possible, sees the iTunes Store revert back strictly to its original TV show incarnation, in which it sold individual episodes for $1.99 (along with since added HD versions for $2.99). Rentals had been ninety-nine cents per episode. The move comes as iTunes television rival Hulu has run out of financial gas and it seeking a buyer. While Apple has been mentioned among possible acquirers, so have most of Apple’s direct and indirect competitors.

Hulu’s business model, in which it streams TV episodes for free with ads interspersed, has largely come to an end. Many episodes stream with nothing but public service announcements embedded, as advertisers have increasingly exited the platform even as viewers continue to turn to the site as a source of free online legal television. Apple’s implementation has been to sell and rent TV episodes through its iTunes software for Mac, PC, and iPad, and while profitable it hasn’t been overwhelmingly popular. Apple’s motivation for acquiring the financially failed Hulu could be less about the traffic currently on and more about the deals which Hulu currently has with the various television networks and studios, and it could explain why Apple just yanked its TV rentals.

Even as Apple saved the music industry from its own internet tone-deafness, it carved out a highly powerful role within the industry which the record labels are none too fond of. Movie and television studio execs were cautious when Apple wanted to add video content to the iTunes Store, and so even as they gradually licensed most of their content to Apple, they also created Hulu as a straw-man competitor (much in the same manner the record labels tried too late to prop up middling AmazonMP3 as an iTunes music foil). As such, Hulu was given overly generous deals with the networks and studios, as they controlled Hulu anyway. But now that Hulu is dying and needs a buyer, Apple could step in and scoop it up – and acquire those favorable contracts in the process…

Please read the rest over @ Beatweek

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