Hope the studios wise up on pricing. Netflix's success is due to the price first and flexibility second. Apple has the opposite drivers-- flexibiliity (get-it-now) is the primary driver, and the cost is marginally on the expensive side. If prices were driven up any more by the studios, both would flop.
As it is today, there is a pretty compelling case for a household to not get cable TV. The perceived value keeps dropping, especially to those not interested in live sports. This reality is just going to get more entrenched, and the studios are going to find themselves without their old reliable revenue sources.
...And, none of this requires people to get content for free! If you factor that in, we should see significant price compression soon...
Netflix is limited to exactly one country. Apple iTunes rentals are available in what -- about a dozen? and soon to be more.
Not only that, you can rent movies and tv shows on the Apple TV anywhere in the world as long as you have an iTunes account in one of the countries that has rentals. iTunes doesn't requre a US credit card and doesn't check IP for location.
Is it saying that since Apple Rental service is 1/2 as old as Netflix, that it should be 1/2 the size of Netflix as well instead of 10%, and therefore a disappointment?
The way I read it is that this is impressive, because growth is typically exponential when you first enter a market. It is especially impressive when the marketplace is crowded and/or you have some entrenched competition (such as Netflix).
As it is today, there is a pretty compelling case for a household to not get cable TV. The perceived value keeps dropping, especially to those not interested in live sports. This reality is just going to get more entrenched, and the studios are going to find themselves without their old reliable revenue sources.
The case is compelling if you are a rational and patient person. My wife is neither. I have been trying to convince her that we can "cut the cord" and save a lot on monthly Comcast service fees. But the bottom line is she is desperate to see her favorite TV shows when they air, and not a moment later. I can't convince her just to forget about it and view everything a day later either for free (on network web sites) or for cheap (via iTunes, etc).
I suspect that a lot of households have at least one such person who clings to what they are used to.
This just doesn't add up. Netflix is available on 100x more devices and there is a lower point of entry . Just wait until Netflix starts offering newer rentals. I think Netflix is still in the testing and audience gathering phase of their service.
I'm hooked on the $8 Netflix service. I always find something worth watching.
Apple Store
- Apple TV
- iPhone
- iPod Touch
- Computer
Netflix
- Apple TV
- iPhone
- iPod Touch
- PS3
- Computer
- Xbox 360
- Wii
- Roku Player
- Netflix-enabled Blu-ray players (8+ units)
- Netflix-enabled home theater systems (4+ units)
- Netflix-enabled TVs (8+ units)
100x as many devices? So Netflix is available on a 10 billion devices? Last September Apple said they shipped 120 million iOS devices since the iPhone launch and it's possible Apple will double that number by the end of 2011. The installed base is only part of the equation since it's about the money Lebowski. You can have Netflix available on every device on the planet but if people don't/won't install it and won't pay for the content you won't be in business for very long.
Netflix is limited to exactly one country. Apple iTunes rentals are available in what -- about a dozen? and soon to be more.
Not only that, you can rent movies and tv shows on the Apple TV anywhere in the world as long as you have an iTunes account in one of the countries that has rentals. iTunes doesn't requre a US credit card and doesn't check IP for location.
Actually TV Shows rentals are in iTunes USA ONLY.
You can't rent anywhere in the world it does check your location.
Analysts are always wrong. Steve has already told us that the iTunes store barely breaks even. Apple operates it in order to sell hardware. It makes no money itself.
if you look at apple's financials, the itunes store turns a pretty good profit. not huge but big enough that it would kill the stock if it was only break even
Agree that Apple runs iTunes as break even or slight profit at 30% cut, but the article notes that at $1B in sales Apple's cut would be 30% to the bottom line, but that doesn't take into account the cost of maintaing and operating iTunes, so the $300M would be top line revenue - not bottom line profit.
I believe that Steve said iTunes does not make any money because the profits are invested back into the infrastructure. Didn't they just spend a billion dollars on a server farm in North Carolina? Now we know what they did with their 30%.
As far as Netflix is concerned, it is available in Canada. Last I checked they didn't have any movies worth renting. There are probably some licensing issues which prevent them from offering anything new. I would think that they still pay the license holders for every movie that's rented.
A very important issue here is that the content owners probably don't treat the distributors equally. I've read that Netflix, for example, got a crazy good deal from Starz and that when it expires, Netflix will look a lot less compelling price-wise.
And I suspect the content owners are really afraid of Apple. They know that Apple will mop the floor with competitors on a level playing field, so they will always try to stack the deck against apple by charging apple more money for the same content -- it's kind of like a landlord who charges higher rent for more profitable tenants.
Apple's strategy seems to consist largely of patience. They are trying to slowly increase demand for video content delivered through iTunes by expanding AppleTV, iPod, iPhone, iPad, and Mac sales. Eventually Apple might gain enough leverage to force better terms out of the content owners. But it will take a long time.
Part of me really wishes Apple would just run a "rip, burn" commercial for DVDs. That would certainly bring things to a head quickly. But no doubt it's best to let the cooler heads prevail and be patient...
The 30% cut on everything should be enough to return a profit. I think they do make $ out of it but its still insignificant compare to the billions in hardware profit.
And studios need to wake up, with plenty of new ways to plug a TV into the internet, they need to come up with a business model ASAP. At least Apple is offering them a way to sell/rent there product instead leeching it for free from ad based websites or bittorrents.
Studios wont be able to "block" all the devices like they did with Google TV. They need to work with sites like netflix that offer a package for a monthly fee and sites like itunes that offer "a la carte" renting. DVD/blueray rental stores are going down fast, studios need to get into an internet renting model.
I think the media business model has less than 5 years of life before it completely dies.
as a netflix streaming customer i can easily say that the selection sucks. and some stuff my son likes might go away next week. only solution would be to buy it on dvd or blu ray.
if netflix actually carried all the content that cable does then the bill would rise to the point where it doesn't make sense to pay for it
I subscribe to NetFlix and it is very good but it does not have the global presence that iTunes has. Obtaining that global presence is not easy for NetFlix because it is really a one trick pony and global expansion is risky.
NetFlix will soon be challenged by Sears in addition to Amazon and others. NetFlix needs to merge with a company like Apple or Google or HP. If I were CEO of NetFlix Apple would be my top choice. If NetFlix's contracts with the hosting companies and the content owners are not too crazy, then there is hope for a good merger when/if Apple opens up iTunes via the Web.
Time will tell.
I wish Netflix was global, I really do. Here in the UK the biggest online catalogue is iTunes, and miles behind it's US counterpart. If Netflix were to launch here strongly, with a big catalogue of HD content, they would dominate for years to come. There's just virtually no competition here right now.
ding ding ding, we have a winner. I agree with you on your points. I also will add that netflix picture and sound quality is lame ass lame. They are so far behind the curve in quality that I feel like its 1998 and i am watching video on my mac lc.
I think the article means that video rentals from the iTunes Store are $60 million per quarter, while video purchases are $50 million per quarter.
As you say, Apple operates to sell hardware. Those 1 million Apple TV units sold in the last quarter represent almost $100 million per quarter hardware sales.
as a netflix streaming customer i can easily say that the selection sucks. and some stuff my son likes might go away next week. only solution would be to buy it on dvd or blu ray.
if netflix actually carried all the content that cable does then the bill would rise to the point where it doesn't make sense to pay for it
Well with the stuff your son likes there's not much you can do except purchase the DVD (what the studios wished we all did) but you can still get new releases in the mail. Cable companies still have a strangle hold on new releases and will fight hard to offer movies on PPV before its released on DVD or made available to Netflix. The more expensive Netflix subscriptions are still cheaper than basic cable.
"The winner of this set-top box rentals war is going to be the company that first gets unlimited TV Shows for a flat monthly fee to their box. It's a much easier sell to say "$15 a month, watch all the TV you want, whenever you want"
We already have that. Its called cable TV. They'd be really smart if they increased their On Demand services. I can already watch most of my shows I miss.
We already have that. Its called cable TV. They'd be really smart if they increased their On Demand services. I can already watch most of my shows I miss.
Well, sort of. They offer catchup and some catalogue on demand, but it only comes as part of a bundle with conventional cable broadcast. There's a market for unlimited catalogue streaming, without conventional broadcast. The Networks and the Cable companies won't ever let it happen though.
Comments
As it is today, there is a pretty compelling case for a household to not get cable TV. The perceived value keeps dropping, especially to those not interested in live sports. This reality is just going to get more entrenched, and the studios are going to find themselves without their old reliable revenue sources.
...And, none of this requires people to get content for free! If you factor that in, we should see significant price compression soon...
Not only that, you can rent movies and tv shows on the Apple TV anywhere in the world as long as you have an iTunes account in one of the countries that has rentals. iTunes doesn't requre a US credit card and doesn't check IP for location.
I'm unclear as to the point of the article.
Is it saying that since Apple Rental service is 1/2 as old as Netflix, that it should be 1/2 the size of Netflix as well instead of 10%, and therefore a disappointment?
The way I read it is that this is impressive, because growth is typically exponential when you first enter a market. It is especially impressive when the marketplace is crowded and/or you have some entrenched competition (such as Netflix).
Thompson
As it is today, there is a pretty compelling case for a household to not get cable TV. The perceived value keeps dropping, especially to those not interested in live sports. This reality is just going to get more entrenched, and the studios are going to find themselves without their old reliable revenue sources.
The case is compelling if you are a rational and patient person. My wife is neither. I have been trying to convince her that we can "cut the cord" and save a lot on monthly Comcast service fees. But the bottom line is she is desperate to see her favorite TV shows when they air, and not a moment later. I can't convince her just to forget about it and view everything a day later either for free (on network web sites) or for cheap (via iTunes, etc).
I suspect that a lot of households have at least one such person who clings to what they are used to.
Cheers,
Thompson
Netflix is limited to exactly one country.
You've just eliminated Canada!
and is the app store profitable yet? Which is more profitable, the itunes or the app store?
This just doesn't add up. Netflix is available on 100x more devices and there is a lower point of entry . Just wait until Netflix starts offering newer rentals. I think Netflix is still in the testing and audience gathering phase of their service.
I'm hooked on the $8 Netflix service. I always find something worth watching.
Apple Store
- Apple TV
- iPhone
- iPod Touch
- Computer
Netflix
- Apple TV
- iPhone
- iPod Touch
- PS3
- Computer
- Xbox 360
- Wii
- Roku Player
- Netflix-enabled Blu-ray players (8+ units)
- Netflix-enabled home theater systems (4+ units)
- Netflix-enabled TVs (8+ units)
100x as many devices? So Netflix is available on a 10 billion devices? Last September Apple said they shipped 120 million iOS devices since the iPhone launch and it's possible Apple will double that number by the end of 2011. The installed base is only part of the equation since it's about the money Lebowski. You can have Netflix available on every device on the planet but if people don't/won't install it and won't pay for the content you won't be in business for very long.
Netflix is limited to exactly one country. Apple iTunes rentals are available in what -- about a dozen? and soon to be more.
Not only that, you can rent movies and tv shows on the Apple TV anywhere in the world as long as you have an iTunes account in one of the countries that has rentals. iTunes doesn't requre a US credit card and doesn't check IP for location.
Actually TV Shows rentals are in iTunes USA ONLY.
You can't rent anywhere in the world it does check your location.
Analysts are always wrong. Steve has already told us that the iTunes store barely breaks even. Apple operates it in order to sell hardware. It makes no money itself.
if you look at apple's financials, the itunes store turns a pretty good profit. not huge but big enough that it would kill the stock if it was only break even
As far as Netflix is concerned, it is available in Canada. Last I checked they didn't have any movies worth renting. There are probably some licensing issues which prevent them from offering anything new. I would think that they still pay the license holders for every movie that's rented.
And I suspect the content owners are really afraid of Apple. They know that Apple will mop the floor with competitors on a level playing field, so they will always try to stack the deck against apple by charging apple more money for the same content -- it's kind of like a landlord who charges higher rent for more profitable tenants.
Apple's strategy seems to consist largely of patience. They are trying to slowly increase demand for video content delivered through iTunes by expanding AppleTV, iPod, iPhone, iPad, and Mac sales. Eventually Apple might gain enough leverage to force better terms out of the content owners. But it will take a long time.
Part of me really wishes Apple would just run a "rip, burn" commercial for DVDs. That would certainly bring things to a head quickly. But no doubt it's best to let the cooler heads prevail and be patient...
The 30% cut on everything should be enough to return a profit. I think they do make $ out of it but its still insignificant compare to the billions in hardware profit.
And studios need to wake up, with plenty of new ways to plug a TV into the internet, they need to come up with a business model ASAP. At least Apple is offering them a way to sell/rent there product instead leeching it for free from ad based websites or bittorrents.
Studios wont be able to "block" all the devices like they did with Google TV. They need to work with sites like netflix that offer a package for a monthly fee and sites like itunes that offer "a la carte" renting. DVD/blueray rental stores are going down fast, studios need to get into an internet renting model.
I think the media business model has less than 5 years of life before it completely dies.
as a netflix streaming customer i can easily say that the selection sucks. and some stuff my son likes might go away next week. only solution would be to buy it on dvd or blu ray.
if netflix actually carried all the content that cable does then the bill would rise to the point where it doesn't make sense to pay for it
You forgot the iPad.
I subscribe to NetFlix and it is very good but it does not have the global presence that iTunes has. Obtaining that global presence is not easy for NetFlix because it is really a one trick pony and global expansion is risky.
NetFlix will soon be challenged by Sears in addition to Amazon and others. NetFlix needs to merge with a company like Apple or Google or HP. If I were CEO of NetFlix Apple would be my top choice. If NetFlix's contracts with the hosting companies and the content owners are not too crazy, then there is hope for a good merger when/if Apple opens up iTunes via the Web.
Time will tell.
I wish Netflix was global, I really do. Here in the UK the biggest online catalogue is iTunes, and miles behind it's US counterpart. If Netflix were to launch here strongly, with a big catalogue of HD content, they would dominate for years to come. There's just virtually no competition here right now.
this is a reply to al bundy 2 posts up
I think the article means that video rentals from the iTunes Store are $60 million per quarter, while video purchases are $50 million per quarter.
As you say, Apple operates to sell hardware. Those 1 million Apple TV units sold in the last quarter represent almost $100 million per quarter hardware sales.
Yea but at a low if any profit margin.
as a netflix streaming customer i can easily say that the selection sucks. and some stuff my son likes might go away next week. only solution would be to buy it on dvd or blu ray.
if netflix actually carried all the content that cable does then the bill would rise to the point where it doesn't make sense to pay for it
Well with the stuff your son likes there's not much you can do except purchase the DVD (what the studios wished we all did) but you can still get new releases in the mail. Cable companies still have a strangle hold on new releases and will fight hard to offer movies on PPV before its released on DVD or made available to Netflix. The more expensive Netflix subscriptions are still cheaper than basic cable.
"The winner of this set-top box rentals war is going to be the company that first gets unlimited TV Shows for a flat monthly fee to their box. It's a much easier sell to say "$15 a month, watch all the TV you want, whenever you want"
We already have that. Its called cable TV. They'd be really smart if they increased their On Demand services. I can already watch most of my shows I miss.
We already have that. Its called cable TV. They'd be really smart if they increased their On Demand services. I can already watch most of my shows I miss.
Well, sort of. They offer catchup and some catalogue on demand, but it only comes as part of a bundle with conventional cable broadcast. There's a market for unlimited catalogue streaming, without conventional broadcast. The Networks and the Cable companies won't ever let it happen though.
http://www.dvdtown.com/news/netflix-...-the-year/8161