Apple Inc. is preparing to put movies in the cloud, entering a market in which it may be both competitor and ally to a similar offering backed by most Hollywood studios.
Representatives of the iPhone and iPad maker have been meeting with studios to finalize deals that would allow consumers to buy movies through iTunes and access them on any Apple device, according to knowledgeable people who requested anonymity because the discussions are private. The service is expected to launch in late 2011 or early 2012.
The talks come as the first movies from the multi-studio venture known as Ultraviolet are launching this week: Warner Bros.' "Horrible Bosses" and "Green Lantern."
People who buy DVDs or Blu-ray discs for those and other upcoming titles, including Sony Pictures' "The Smurfs" and Universal Pictures' "Cowboys and Aliens," will have access to digital cloud copies they can instantly watch on their Internet-connected TVs, smartphones and tablet computers. Ultraviolet purchases via the Web, without discs, are expected to come in 2012.
Every major studio except Disney is working on Ultraviolet with a large group of retailers and electronics companies that notably does not include Apple.
The studios are eager to boost purchases of movies, which have flat-lined in the face of competition from less expensive video on demand and Netflix and Redbox rentals. Sales of DVDs and digital downloads are still crucial to the studios' bottom line, as they are much more profitable than rentals.
However, despite the increasing popularity of digital distribution, online movie purchases are on track to bring in only $231 million this year, about the same as in 2010, according to IHS Screen Digest.
Storing digital films in the cloud, instead of making buyers manage the digital copy themselves on a computer or other device, could help spur online purchases by making it easier for people to access the movies on any device.
On Wednesday, Apple began rolling out an update to its operating system for mobile devices, called iOS5, which enables users to access music, photos, and some other media from the cloud, but not yet movies.
Though studios have spent years building Ultraviolet, people familiar with the thinking of several studio executives say they'd be happy to see Apple join as well, since it accounts for 66% of online movie sales and rentals.
"This is going to be a huge boost to a struggling online movie business," said Arash Amel, digital media research director for IHS. "Apple is going to make it work right off the bat."
Building a cloud movie business without iTunes would be difficult, Amel noted, as it accounts for 66% of online movie sales and rentals.
Under the plan Apple is proposing, users could stream movies they buy via iTunes on any device the company makes, such as the Apple TV, iPhones and iPads, as well as on PCs.
In addition, though Apple is not part of Ultraviolet, its devices could be compatible. The people who have talked to Apple representatives said the company is considering allowing people who buy and store movies with Ultraviolet to easily watch them on Apple devices via apps. That would be a big help to Ultraviolet, as Apple dominates the market for tablets and is one of the top two players in smartphones.
Movies bought on iTunes, however, would continue to work only on Apple devices and computers. That's because the company makes its biggest profits on hardware and wants to encourage people to keep buying its digital devices.
A spokesman for Apple declined to comment.
-- Ben Fritz
Photo: "Bridesmaids" on Apple's iPad. Credit: Kirk McKoy / Los Angeles Times.