We’re eager to try out Apple’s new movie rentals, next time we have time to rent a movie. Meantime we are trying to keep up with the arguing webheads: Has AAPL “reinvented” the home movie experience? Or has it simply entered a battle that has many well-equipped competitors?
Michael: This isn’t going to change the market tomorrow or the next day and Netflix will still ship lots of shiny disks for a while. This is about the future and providing the eco system that consumers want and the technology to make it happen. Short terms losers are likely competitors like Vudu and things like the Netflix streaming service. Will also put pressure on the Xbox eco system to get content off the box to other devices. Like iTunes Music Store, the world won’t change overnight but today’s news is super important and potentially disruptive.
David: Lost on iTunes a day after release, without having to wait for the DVD was a breakthrough in its day, but quickly matched and bettered by ad-supported streaming solutions. The iPod revolutionised music, and the iTunes store’s catalogue, ease of use, pricing, and the fact you could buy singles were game-changers. This isn’t about “Internet movies,” it’s about delivering on-demand content to the TV set. The competition is with cable, satellite, Blockbuster, Netflix, and the networks all of whom are tough. The “dinosaur” studios & networks are way more aggressive in exploring digital than the record industry was, and Apple can’t bully them like it did the labels.
More fodder for the “let’s not give Apple the prize just yet” set, via a morning note from Citi analyst Richard Gardner, who notes more of the service’s flaws:
• First, at $3-5, Apple rentals are generally $1-2 more expensive than a la carte rentals at Blockbuster or subscription services such as Netflix and Blockbuster Total Access.
• Second, iTunes will offer access to new releases a full 30 days after they become available at Blockbuster or Netflix (and on DVD).
• Finally, watching Apple rentals on a TV will require the purchase of an AppleTV console for $229, which may be a tough sell for consumers who already own DVD players (which is the majority of consumers).
Could Apple’s rental rates come down over time?…perhaps. However, Citi analyst Tony Wible notes that movie studios are reluctant to offer download pricing which could negatively affect sales of the physical DVDs that generate the bulk of their profits.
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