Netflix is far ahead of Apple in online delivery of movies. They already have a huge subscriber base with DVD rentals, now those subscribers watch them online as well.
Just because Apple sold a lot of set-top boxes, doesn't mean they are selling a lot of TV shows and movies. Don't forget Direct TV, Comcast, Time Warner also offer On Demand purchasing of movies.
Hulu and Fancast are way out front of Apple on delivery of TV shows.
http://news.cnet.com/8301-31001_3-10459494-261.html
I'm on Apple's side here. I like the competition!
Ten years later, I can't believe people are still missing the point. No offense intended to you at all, even "analysts" get this one wrong.
Apple makes a pittance, relatively speaking, from iTMS. Nothing. Maybe less than nothing.
It's the $9.99 CDs at Best Buy. It's there as an incentive for you to buy iThing, where they have huge margins.
Apple couldn't *possibly*, possibly, in a million years care less about being "behind" at distribution of the content as long as someone is distributing it in a way that necessitates a device. Like, you know, Hulu, which will provide for free (free to Apple, maybe not to you) one of the #1 reasons for non-serious-techie folks to buy an iPad.
It's the same "wrong" that people fall prey to when they think that Apple's opposition to Flash is about forcing people to buy stuff through iTMS. Again, they couldn't possibly care less. In the big scheme of things, they make zero money from it. It's about wanting to make their hardware devices the absolutely, positively best option for the big middle of the bell curve that isn't bothered too much about configurability.
Margins on content delivery are less than zero. A thousand bankrupted companies, and zombies like AOL, testify to this. Without exception. Margins on non-commodity hardware (read: hardware coupled with usability in the software) are where all the money is.
Michael Dell had some choice remarks for Apple a few years ago, and now they could buy him and his firstborn without blinking-- but it's more fun to let him stay around as comic relief.