iTunes movie rentals vs. Netflix: It's Apples (Jobs variety) and oranges

iTunes movie rentals vs. Netflix: It's Apples (Jobs variety) and oranges

Summary: Apple makes a big plunge into the movie rental business and almost instinctively folks dust off the "Netflix is screwed" line. However, you may want to hold off on that Netflix obituary (again).

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TOPICS: IT Employment, Apple
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Apple makes a big plunge into the movie rental business and almost instinctively folks dust off the "Netflix is screwed" line. However, you may want to hold off on that Netflix obituary (again).

Now it's entirely possible that Apple's movie rental service (gallery, blog focus, video) will be a hit for the iPod carrying masses. And I'm sure I'll rent a movie when I travel. But Apple's movie rental service doesn't spell the demise of Netflix for a bevy of reasons. Here are a few:

  • Apple's movie rental service is confined to the PC and the iPod/iPhone unless consumers buy Apple TV, a device that promises to be better the second time around but still is another box in an already cluttered living room.
  • Apple's rental service is the same pay per view model everyone is used to, but Netflix's model is subscription based. Some consumers will be fine with a rental that self destructs 24 hours once a movie is initiated. Other people--heavy movie watchers--appreciate the all-you-can eat approach of Netflix. They are two different audiences that can coexist. One audience cares that Netflix has a catalogue of 90,000 titles compared to Apple's 1,000 titles. The other audience could care less.
  • iTunes movie rentals are designed to sell iPods. That's a big distinction there. Apple's biggest goal with its movie rental launch was to get all the studios on board so you'll buy its devices. To do that Apple basically agreed to the same model cable companies go with. You pay $2.99 to $3.99 to view a movie for 24 hours. Netflix's model is designed to deliver a recurring subscription revenue stream. Simply put, Apple isn't wasting its time trying to put Netflix out of business.
  • The game is to get into set-top boxes. Apple wants you to buy a new box for movie rentals in a couple weeks. Netflix will be embedded in LG set-top boxes in the second half of the year. In the long run Netflix's plan may make more sense, but good luck ousting the incumbent providers.
  • Netflix's real worry is Blockbuster not Apple. Apple's service will take time to gain mass adoption. Blockbuster has much more potential to give Netflix a headache with pricing pressure and its replica mail delivery model.

Will iTunes be a viable threat to Netflix? You bet. But it's nothing that Netflix hasn't seen before.

Topics: IT Employment, Apple

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12 comments
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  • Netflix + gaming consoles

    Gaming consoles are the ideal hardware platform for Netflix if they want to see a more rapid expansion into the living room (via streaming anyway.) The battle to squeeze yet another box into a crowded living room where people are trying to cut back will be a tough proposition for Netflix AND Apple. Better to position yourself via an existing platform with broad distribution than try to start from scratch.

    Netflix streaming via the Xbox/MediaCenter would seem to be a perfect match. And the competing interests of Netflix streaming v/s Xbox Live Marketplace content could be easily remedied by positioning the former as the basic streaming service and the latter as the premium/HD/downloadable/portable content service. Maybe I'm just reading too much into the fact that Netflix's founder is on Microsoft's board, but it seems the best natural progression for both parties (and a win-win-win for both parties and consumers.)
    RustyShackleford
    • That would make sense

      After all Microsoft has been rumored to buy everything else. Why not Netflix
      Larry Dignan
      • Man I hope not!

        Netflix works great, last thing we need is some mega corp coming and messing things up! ]:)
        Linux User 147560
    • It's in your hand, not the living room

      Most rented downloads will be watched on an ipod or a laptop. Itunes takes it past the "early adopter" types to the masses.
      tzcannon
  • RE: iTunes movie rentals vs. Netflix: It's Apples (Jobs variety) and oranges

    Netflix has unlimited online movie viewing at no additional cost. nuff said!
    IroncladPlaya
  • We have seen the future, and it's...

    Who knows--maybe Netfix, maybe Apple. But of all the announcements made at Macworld yesterday, the movie rental was the (pardon the expression) blockbuster. The skinny notebook, while it's cool and all, will be small potatoes compared to that one. When people see how convenient it is to do rentals with Apple TV, look for it to become VERY popular! I think S.J. was right about this being the beginning of a "revolution", but it will take a while for the importance of it to sink in.

    I've had an ATV for a while, and use it mostly to look at homegrown digital photos/movies via iTunes, and occasionally check out some YouTube stuff. But I'm really looking forward to getting the software upgrade (Free! Yay!) in a couple of weeks and trying out the HD rentals. Woohoo!!!
    Userama
    • Message has been deleted.

      Mectron
      • I think somebody said that about the iPod once.

        ;-)
        Userama
      • Message has been deleted.

        thetwonkey
  • iTunes movie rentals going the way of the dodo

    (and NetFlix 'watch now', ect)
    if stuff like this becomes the norm

    http://tinyurl.com/yqx8hv

    Sad, really. They have the content, we want the content, and we are willing to pay a reasonable price for it.
    I just don't want to get held up by every middle man along the way.
    mdemuth
  • What DRM does Apple use for this?

    Or are you on your honour that you won't keep the movie after you've watched it? Steve Jobs [b]says[/b] he is against DRM, I'm just wondering if his actions align with his words.
    NonZealot
  • Is it just me?

    Am I the only one that sees the striking similarities between this latest Apple venture and the Circuit City backed, consumer reviled Divx system (not to be confused with the codec). To this day I refuse to shop at CC...
    UCase