Rumors are abounding that the continually delayed launch of Apple’s iTunes Replay feature for movies is further held up by HBO’s contracts with the major six movie studios. Specifically, four of the six major studios have not signed on with Apple for fear of breaching their contracts with HBO. The concept behind Apple’s iReplay for movies is that a consumer could purchase a movie once and store it on a digital “cloud” on Apple’s external server. Rather than owning the physical DVD or Blu-Ray, the consumer could stream the movie from their cloud to any supported digital device. In other words, if you went to Italy on vacation, you would effectively have your movie collection with you, since you could stream it via iReplay anywhere you wanted on a supported device.
To understand the hold-up, we’d have to go back in the past to before the Apple “cloud” or iReplay was conceived, take Apple out of the picture, and look at HBO negotiating with major movie studios. As part of their respective deals with the major studios, HBO is apparently entitled to a 3 month “window” (not to be confused with Microsoft Windows) in which they have exclusive streaming rights. You might have noticed that HBO will get some exclusive first-run movies that aren’t available anywhere else for awhile: that is the “window” in effect. This exclusive “window” is one of the reasons people pay for HBO and something HBO wants to maintain. Although vendors are allowed to sell physical copies of the DVDs/Blu-Rays, the contracts with HBO are reported to ban any other form of digital distribution or streaming while the window is in place. In other words, while the “window” is in effect, you can go to your local video store and buy or rent the movie, but you shouldn’t be able to rent it online or find it on Netflix.
You might be asking why this “window” has anything to do with iReplay or why it should effect someone who bought the movie already through Apple and now just wants to stream it through their cloud. Well, the contracts between HBO and the major movie studios aren’t publicly available and are most likely confidential, so we’d have to guess. However, generally these types of contracts can be 100+ pages long and have been negotiated over between teams of lawyers for weeks or even months, down to the punctuation. To maintain its exclusive “window,” it is reasonable to assume that HBO insisted that very sweeping, broad language be included to prevent any form of streaming. Add to this the fact that these contracts were most likely negotiated without anyone even considering the possibility of something like iReplay, then you have a legal stumbling block. HBO certainly does not want to jeopardize its exclusivity by carelessly rewording the contract. Hence, the studios don’t want to breach the contract with HBO, HBO doesn’t want to give up something for nothing, and Apple just wants to make it happen.
Rumors suggest that this might cause the launch of iReplay for movies to be delayed for months while Apple, HBO, and the studios jockey and jostle over their respective positions. However, with billions in potential revenue on the table, sometimes the business-side of negotiation can push the legal-side to find something that works fast. Nerds in Court will try to keep you updated as this unfurls.