If the rumors hold true, and hope not, I will be somewhat disappointed with the Apple rental model. I heard you will only get to keep them 24 hours and they will be $3.99. I think that is too short of a time and way too much for a downloaded movie.
Yeah, I agree. The studios keep picking weird pricing numbers for variants of PPV, as they do for hard media (DVD, etc.). They don't seem to understand the psychology involved: I'll buy more in total $$ than I would have if I feel that I'm getting value for that money. In other contexts, I refer to this as my "threshold of pain". If your price is enough to make me think about it in relation to the object offered, I'm considerably less likely to buy it. For PPV, my threshold feels like it would be around $2, inclusive (taxes, etc.). I'd be inclined to watch a bunch of PPV during a month at that price, even without ownership. I might watch one PPV each month at $4 per, and that's only if the AppleTV becomes multipurpose like a media center. I've bought exactly one
PPV from DirecTV in the fourteen years since I got the service, but I was willing to pay $900 for the original DTV RCA receiver and do a self-install three months before they officially rolled out the then-untried service (early adopter) because the value proposition was that much better to me in relation to the ultra-crappy cable service I had.
This is similar to my DVD purchase habits. I'll rummage through the DVD discount box at Walmart and will pick up anything remotely interesting for their $5.00 price. At $10, that becomes a thinking decision. At $15, I have to want it. At typical initial retail DVD prices ($20-25), it had better be on my (short) list of favorite movies for me to even consider it - I know that within a few months, the price will drop to or closer to $10, and I'm very willing to wait. This same psychology has kept me from seriously considering either hidef DVD format because the studios decided that they're offering something of more value (I disagree), so they've set the standard price closer to $30-45. I can think of maybe four movies that I would buy at that price, just for the hidef.
Re: Apple. I would consider $4 OK if you got to permanently retain the movie, even DRMed to your box. The studios' cost of goods is effectively nil for this - Apple is likely the digital media source via iTunes or equivalent - so the studios are just gouging on their margins at that price. They have no distribution costs, effectively no inventory costs, no shipping, no returns, no damaged goods, minimal marketing for the service (sunk cost for the theater release of the movie), plus they can make their entire catalogs available. This means that any archived movie that they have that can cover the digitizing costs would be worth releasing. I don't know where that $$ break-over is, but I suspect that it's virtually free for anything that they've already converted to DVD. They can monetize that many more movies, increasing their total revenue, as opposed to retail where they have to compete for limited shelf space and older titles get cycled out of availability as a result.