Netflix (NFLX) is reportedly working on an iPhone app for its popular movie streaming service.
If it’s true, there are plenty of technical, legal, and behavioural hurdles here: For example, getting the rights to stream movies and TV shows over a mobile network, and just getting people to watch two-hour movies on a tiny-screen device whose battery will barely support it.
But the hurdle that people seem most interested in is whether Apple would allow the app to exist in the first place.
There are two issues: Apple’s (and AT&T’s) tendency to limit video apps that require a lot of bandwidth to “wi-fi-only,” meaning you can only watch over a wi-fi hotspot, and not over the cellular network. And Apple’s competition with Netflix via iTunes.
Regarding the first issue: We don’t think it’s as simple as “Netflix would use a lot of bandwidth, so let’s keep it off 3G.” That’s the theory as to why other video apps like Sling Media’s SlingPlayer was forced to wi-fi-only, as well as CBS’s March Madness app, Joost, etc.
But based on conversations we’ve had with developers, we think that’s outdated thinking. Now that Apple has an official video streaming API — built into iPhone OS 3.0, for the first time — we think more streaming video apps, like Major League Baseball’s “At Bat” full game streaming, will be approved for 3G streaming.
Before iPhone 3.0, the only video officially supported on the iPhone over 3G was “progressive download” — like the built-in YouTube app uses, and MLB At Bat uses for highlight clips, etc. This just means that your iPhone is downloading a movie file the same way it downloads a photo, and starts playing it off its internal memory.
Streaming — where you’re constantly pulling a stream second-by-second off a server, and playing it as you receive it — is a different story.
Before Apple released iPhone 3.0, early streaming apps like SlingPlayer and March Madness improvised their own methods, which worked well enough, but they were not using official Apple streaming techniques. We imagine the improvised methods were not as efficient/reliable as Apple’s official streaming API, then in development, so Apple and AT&T kept those apps as wi-fi only — where they don’t need to be efficient, because they’re not operating on a fragile cellular network.
But look at MLB At Bat’s new full game streaming: It uses the iPhone 3.0 streaming video API, and is allowed over 3G even though baseball games are three hours long. (Too long to watch on a single iPhone 3G battery charge, as we learned at the gym the other day — one hour of baseball equals 70% battery suck.) And surely more people like baseball than own SlingBoxes, so Apple couldn’t have just approved it thinking no one would use it.
So we think that more video apps will start to come out that are 3G-enabled once the developers plug into the official streaming API.
Caveat: Netflix may limit itself to wi-fi only if it thinks that’s a way to skirt the need to get separate mobile rights to the movies and TV shows it streams.
Because streaming to an iPhone over wi-fi is really just a specialised way to stream to a computer — the same way streaming to an Xbox is like that — it might fit under Netflix’s existing rights. Streaming over 3G, however, would presumably require obtaining new sets of rights, which Netflix may not want to do right now. (At very least, not for all of its content.) So the whole “would Apple approve it?” discussion may be moot — Netflix may force wi-fi-only itself.
Regarding the second issue — competition between the companies — it probably shouldn’t be a big problem.
- There’s never been a better time to make Apple look anti-competitive. The FCC is already looking into its blocking Google Voice, an Internet phone app from Google that competes to some degree with AT&T’s phone and messaging services.
- And anyway, it’s not like there aren’t other movie streaming apps already on the iPhone, such as Joost — they just aren’t that good.
- Netflix and Apple share different business models for movies — Netflix’s are streamed as part of a subscription, and Apple’s are purchased or rented on-demand — and their content library does not overlap much.
- Further, iTunes is a break-even business designed to sell more iPhones, iPods, Apple TVs, Macs, etc. A Netflix app will probably help sell more hardware than its competition with iTunes will hurt Apple.
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