Four Reasons Why Studios Are Hesitant to Sell Newer Movies on iTunes

Apple is hoping its technology can revolutionize how consumers watch entertainment, the same way its iPod has changed how they listen to music. The Cupertino-based company has reportedly generated interest from studios in an online rental service, but sales are another story. Here are four reasons why some studios are dragging their feet, according to the LA Times:

1. Apple currently controls 70% of the digital-music market. The studios don't want them (or any one company) to dominate the online distribution of movies as well.

2. The studios want to preserve price for DVDs, which have been their cash cow for years. Apple sells music at a discount to move more of their iPods. The studios fear Apple is using a similar strategy with movies: Sell them for cut-rate prices so people buy more hardware. That would turn the home-video business on its head. With DVD sales maturing, Hollywood is now pushing high-definition Blu-ray and HD-DVD discs that cost an average of $22 to $23. That makes studios less interested in embracing new, inexpensive digital distribution that would depress the price of new releases.

3. iPods currently play pirated versions of movies and TV shows that can be obtained on illegal file sharing sites (there is concern that Apple TV will do the same). Some studios are holding up licensing deals, trying to pressure Apple to take more aggressive steps to combat piracy. For example, they want Apple's devices to look for a unique identifying code, known as a watermark, on digital video to certify that it is a legitimate copy -- and to refuse to play the film when that watermark is absent.

4. Apple pays less for newly released films than rivals such as Wal-Mart Stores, the nation's largest retailer of DVDs. Apple buys new movie downloads for $14 to $14.50, then sells them for $14.99. In contrast, Wal-Mart pays the studio $15 to $18 for DVDs, which it sells in the stores for slightly more. The studios fear that offering new releases through iTunes will cause Wal-Mart to retaliate by slashing DVD prices.