Netflix to launch service to compete with new iTunes rental service
Last week, Apple rang in the New Year by announcing
a new partnership with Twentieth Century Fox to bring Fox's movie catalog
to the library of films it will be offering for its new download rental
service. Apple's new service takes rentals even a step farther into the
digital domain over mailer
based online movie rental services like the one Netflix primarily relies
upon. Apple is tentatively planning to rent films at $2.99 per movie for
a 30-day rental.
The market is growing but, rather vicious, as is apparent by
the recent
folding of Wal-Mart’s movie download rental program.
Netflix currently offers functionality similar to Apple's planned service,
which allows subscribers to watch movies from a catalog of 6,000 films and TV
episodes on their computer – the service is offered free to Netflix
subscribers. However, Netflix is unsatisfied with the limited amount of
content and the fact that consumers can't watch the content where they watch
most of their movies -- on a TV.
Netflix currently has 7 million customers, but many still
rely on mailers which provide access to a much larger library of 90,000
films. Netflix subscribers pay between $4.99 and $16.99 a month depending
on their plan.
Now Netflix is planning to challenge Apple with a slightly
different approach. Netflix has announced plans to release a new
service that will download rentals directly -- not to the user's computer, but
to a proprietary hardware set-top box. The service will be free to all
Netflix subscribers.
The hardware box is being created by LG Electronics and will be released during
the second half of 2008 and connects directly to home networks. Pricing
has not been announced, but a source at LG revealed that the functionality will
be embedded for free into the $799 LG dual-format
Blu-Ray/HD-DVD player.
The product is not an entirely new idea. Apple has the Apple TV, which
transmits video from a home computer to the Apple TV set-top box
wirelessly. The device has not
been warmly received, so it should be interesting to see whether Apple's
woes are due to its own missteps or an unready market. TiVo and Amazon
also partner to offer similar functionality.
While Netflix is not offering up a revolution, it is bringing its power as an
industry leader, staking its money and reputation to back a greatly expanded
direct download service. The move shows the giant to be among the firm
believers that such services are the wave of the future.
"I modded down, down, down, and the flames went higher." -- Sven Olsen
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