This link has been bookmarked by 1 people . It was first bookmarked on 14 Jan 2008, by Gonzalo Martin.
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14 Jan 08
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Others have also depicted Apple's move as a direct strike at Netflix, but I think this battle is illusory. Rather, I view Apple's introduction of rentals as clear competition for the likes of Movielink, CinemaNow, Amazon
Unbox, XBox LIVE and other rental stores, but not a blow to Netflix. The value propositions are very different. That's because Netflix very wisely has made the Instant Watching feature a value add for its subscribers, not an incremental fee. -
From an economic standpoint alone, the breakeven is only 4+ movies, which is likely well below the monthly consumption of most of Netflix's full unlimited subscribers
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Apple's rental model, users are still subjected to all the same online movie limitations all the other services have suffered from: no easy playback on TVs, lack of portability, viewing window limits, etc. Granted iTunes downloads enable watching on-the-go (vs. Netflix's streams), but I don't see that as a big differentiator. With Netflix you get the best of DVDs' advantages and now unlimited online delivery
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if Apple were to pursue subscriptions, that would be a direct attack on Netflix
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The fact is, Netflix has spent heavily on marketing over the years, and its strong brand awareness and 7 million subscriber base are quite meaningful advantages.
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Online movie delivery, whether rental or owned, still has a long way to go to achieve mainstream success. Apple will certainly nudge the category forward, but not dramatically. Still, Netflix needs to remain aggressively on offensive to retain its leadership mantle. This is a category with lots of moves yet to be made.
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