It's Hollywood 2.0 as studios scrap script deals, sign on with Apple rental biz

Two pieces of news coming out of California over the last 48 hours should put to rest any doubts about whether the rise of Internet TV, especially when combined with the impact of the Hollywood writers strike, has the power to upend the economic status quo of the entertainment industry.

First came word on Monday that almost all of the major studios have scrapped development deals with dozens of writer/producers as the Writers Guild of America strike drags on.

As reported in the Hollywood trade press, some of those terminated were high-profile scribes such as Josh Friedman, executive producer of "Terminator: The Sarah Connor Chronicles," whose latest episode scored stellar ratings this past week.

Yet most of those axed either had no active, high-profile production deals or had less than a year left on their contracts, and based on the comments of some studio heads, the cost-cutting moves could be the new order of business in Tinsel Town.

Studios typically pay $2 million to produce a 30-minute sitcom pilot and $4 million for a one-hour drama, and with ad revenues drying up due to the strike they are looking to cut costs. Less-promising deals and those about to expire are obviously the low-hanging fruit.

Yet if the big studios ultimately feel no pain from their decision to pull the plug on these projects, there's a very real chance that they could be much quicker to kill such deals -- or sign fewer of them -- to cut costs even after the writers go back to work.

While the barbs were flying in Southern California between the studios and WGA members, Apple Inc. CEO Steve Jobs was in San Francisco announcing that all of those same studios had signed up to supply content for his company's new iTunes movie rental service.

The Apple service, designed to compete with those from Netflix and Blockbuster, lets Web users watch new titles for a 30-day period for $3.99 each, with older titles fetching $2.99.

Given the popularity of iTunes, the service may boost the digital revenue stream of the studios -- a major bone of contention with the writers' union, which wants a bigger cut of DVD sales and Web videos.

It may also give both sides in the strike better information about which business models will work on the Web.

While the Hollywood status quo gets upended, new startup companies are looking to cash in on the future of the industry.

One of those with a pitch on Vator.tv is MyFilmU, which is looking to find and fund new film makers at U.S. film schools.