Why Steve Jobs has pulled one over on the entire movie rental industry

With iTunes movie rentals now available, Don Reisinger thinks Steve Jobs pulled a fast one on the online rental industry. Is he right?

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.

 

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