Why Steve Jobs has pulled one over on the entire movie rental industry
With services like Movielink, Netflix, and Vudu, the opportunities seem endless for companies that endeavor to turn the corner in the movie rental business. And while all of these companies positioned themselves in the market, Apple was quietly lurking in the shadows, ready to pounce on January 15, 2008.
After showing their hands to arguably the world's most capable CEO, every other movie rental service created an environment where Steve Jobs could pick and choose what features he liked and create a more robust offering.
After all, with rentals ranging in price from $2.99-$4.99 depending on release date and quality, and a 30-second buffering much like we've seen with the Vudu box, why would anyone even consider buying rentals from any other service besides iTunes (with the one exception perhaps being Netflix)?
Simply put, Jobs is poised to conquer yet another industry.
Let's face it: as it stands, the online movie rental business as we know it has yet to become a major industry in the world of video. That said, just about everyone but Blu-ray zealots believe movie downloads are the wave of the future, and we've all been anxiously awaiting a service that may actually follow through on some of the promises we've heard from these clowns.
Now, there's no guarantee that Apple's service will truly re-create the industry, and we can't know for sure that iTunes movie rentals will become a success. But if you ask me, the writing is on the wall. Not only will iTunes movie rentals easily surpass any other service's revenues within the next quarter, it will usher in a breath of fresh air that has been lacking in this industry for quite some time.
More than anything else, Apple can rely on its movie rental service to be a success for two reasons: iTunes' success and the downright stupidity of its competitors.
Although I believe Apple will have a run for its money on the music front, courtesy of Amazon, iTunes is still an unbridled success that should never be taken out of the equation when analyzing the future success of Apple. After all, if Jobs is able to sell billions of songs on iTunes for $0.99 per track, who's to say that the same clientele won't want movie rentals?
Unlike the other services, iTunes movie rentals are now being put in front of far more people than any other service, and the end-to-end integration that has made Apple such a success is back again with the updated Apple TV. For a relatively low barrier to entry--$229--all iTunes users can have an Apple TV that will let them watch movies on their widescreen TV. Even better, they can now transfer that rental to an iPod or an iPhone with ease. Can you do that with any other movie rental service?
In effect, Apple has been able to utilize its current stable of products to its advantage, while the rest of the online rental industry is wondering what to do next. To make matters worse, Movielink has relatively no prospects of success given its Windows-only functionality, and its owner, Blockbuster, has no idea how to make money in this business anymore.
Vudu is a similar service to Apple's in that it offers a set-top box that will allow you to stream rentals as it downloads in the background, but most of the movies are awful, and the entire library is refreshed each month, meaning sometimes the box will offer the movies you want and sometimes it won't.
Apart from the pack, Netflix has made strides in the online rental business. By tying it to its mail-delivery system and finally opening it up to all customers for unlimited downloading, the Netflix service is quite possibly the one we know of that has any chance of taking Apple on. That said, the 6,000 videos the site offers are not nearly enough to make an impact and given the increasing cost of doing business, how long will it take before Netflix finally loses steam?
More than any other announcement at Macworld, Apple's decision to streamline its iTunes movie rental service is the most important to its bottom line. Will the MacBook Air be big? Probably for a little while. Does Time Capsule have promise? I guess. But when it comes right down to it, iTunes movie rentals will carry this company into the future and destroy its competition in the process.
Don Reisinger is a technology columnist who has written about everything from HDTVs to computers to Flowbee Haircut Systems. Don is a member of the CNET Blog Network, and posts at The Digital Home. He is not an employee of CNET. Disclosure.
Don, I think you're seriously underestimating Netflix and the loyalty of their customer base.
I suspect the pricing of the service that Netflix eventually provides will be one of the bigger reasons to stay away from iTunes. Right now they offer unlimited downloads of a subset of their available content with the obvious problem of delivering it to your TV. They say they're working with hardware vendors on the final delivery piece, it would need an interface easy enough for my 70+ year old mom to use of course.
Sony has a pretty interesting device with an Ethernet port that mounts behind a bunch of their TVs to deliver internet based content. It's a few bucks more than the Apple TV box, but it's accessible through existing Sony remotes and NOT proprietary to iTunes. If there were an interface to Netflix, I'd be going that way this afternoon.
The next year in this game is going to be fun to watch.
1. Broadband isn't yet as common as it needs to be for this to "kill" DVDs or high-def DVDs.
2. Some movies you simply don't want to rent, you want to own. Seriously, you expect me to cough up $4 every time my kids want to watch the latest Pixar release? Charge me $40 for a disc, I'll still save money in less than two weeks!!
Pay-per-view is Hollywood's wet dream, but many customers don't want it as their only option. So while it may take off, and do well at the expense of DVD/Blue-Ray, it won't kill either format. Because sometimes you just want to own the content, and watch it as often as you want without limits.
The second issue is a killer -- one they can address by offering a "permanent unlock" option. But until that day comes, it will still be only the few technically saavy or Apple zealots who really flock to this option.
Here's whats missing.... the option to buy. If I rent a hi-def movie for $4.99, I want to option to buy the full movie for an extra $14.99. I want to be able to watch it on my iPod, iPhone, or iTunes. I would also like the option to burn it onto a DVD or Hi Def DVD. Is this a reasonable request?
I think that if I pay for a rental, the store should remember that I rented it as long as my account is active. If I decide to purchase the full movie, I should be credited for my rental in the same way Blockbuster will credit my rental fee towards the purchase of a full DVD purchase.
The ability to burn to DVD or some Hi Def DVD would just be icing, its not necessary. I just want to be able to rent a movie, and if I like it, have the option to buy it. I want to rent-to-own, if you will.
I think Amazon Unbox is better (except for the HD) in that they have a purchase/buy option. Also, I can use my TiVo box for Amazon Unbox.
I think Apple's (and Xbox's) approach of a closed system will lose out to Amazon Unbox or Netflix where they are soliciting third party STB manufacturers to have their services available on as many (multi-purpose) boxes that are connected to TVs as possible.
Hong.
And yet, the Apple TV 2 is tempting me, because I occasionally rent a movie, and it would be most convenient for me to use an Apple TV to get one on my home theater. (I also got some Apple Store gift cards for Christmas!)
Nevertheless, I don't want to sign up for a monthly service that I may or may not use; my desktop PC is not close to my home theater, so forget the online content from Netflix; my local Blockbuster (30 minute round trip) doesn't always have the Blu-ray film I want; and I don't own a Tivo and thus UnBox - I have EyeTV with OTA and QAM signals on my MacBook.
Downloads may well be the future, but I still enjoy watching all the extra features you get on a Blu-ray or HD DVD disc. It's just that the Apple TV could provide me with convenience and good quality at 720p and Dolby Digital.
By the way, I was an early purchaser of Apple TV and have used Handbreak to essentially put my DVD collection on my iTunes. It has been great IMHO and this tweaks it to give it broader appeal.
One more thing...
If its Apples aim to deliver content a subscription based system that could potentially replace my cable provider would be awesome!
First, I've been trying to decide between HD-DVD and BluRay, and now I don't have to buy a player for each. Apple just left them behind.
Second, I'm canceling my NetFlix account as soon as I buy an AppleTV. Personally I use NetFlix for movies to watch on the plane while traveling, and now I don't need that anymore.
On top of that, when you download a movie, you do not get all the extra's that you get on a DVD. If I could rent a movie on line and still get all the extras then I would be much more likely to do it. Until then, I'll stick to stopping at Blockbuster and seeing what is available. Although, when all the new programming comes to a grinding halt as the writers strike continues, then these outlets will see a huge jump in business as people get sick of reruns and mindless "reality" shows. having said that, I can also see cable's subscribers disconnecting too. Why pay for service that we are not getting. I could save $60 a month that way. I could watch an awfun lot of DVD's for that price.
- by Alpachino321 February 12, 2008 12:36 PM PST
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