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Netflix Grabs 61% of U.S. Digital Movie Market, Apple at 4%
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iTunes is good for mainly one thing - when you want to watch something specific, and you want to watch it NOW. Unfortunately, it's just not where most consumers heads are at right now. People want a service that gives them the most bang for their buck.
When a movie comes out on iTunes, do you think most people would rather...
a.) Pay $5 to watch the movie.
b.) Wait a few weeks or a month, get it shipped to them through Netflix, for what amounts to a fraction of their $10/month subscription.
People want to save money. It's either pay $10 a month and pretty much watch whatever you want, either through streaming or the mail, or pay $5 to watch one movie once.
If they REALLY want to watch the movie, then iTunes and Amazon are there for them. The problem is, I don't think this happens very much anymore. There's so much content to get on Netflix through the mail or streaming, that people just don't mind waiting. They have plenty to keep them busy.
When a movie comes out on iTunes, do you think most people would rather...
a.) Pay $5 to watch the movie.
b.) Wait a few weeks or a month, get it shipped to them through Netflix, for what amounts to a fraction of their $10/month subscription.
People want to save money. It's either pay $10 a month and pretty much watch whatever you want, either through streaming or the mail, or pay $5 to watch one movie once.
If they REALLY want to watch the movie, then iTunes and Amazon are there for them. The problem is, I don't think this happens very much anymore. There's so much content to get on Netflix through the mail or streaming, that people just don't mind waiting. They have plenty to keep them busy.
I love Netflix, I mostly use the streaming for old TV shows or current ones. I'm able to catch up to Dexter now, Law & Order SVU, etc... Love the fact I can use my PC, Iphone, PS3 or Wii to watch Netflix. Nice to have on the go when I have my 10 year old twin nieces.
Current movies don't bother me either because if I really want the movie, I just buy the Blu-ray or DVD.
Current movies don't bother me either because if I really want the movie, I just buy the Blu-ray or DVD.
I think it's way too soon to count Apple out. A few thoughts...
1) As others have noted, a lot of people are using Apple TVs to watch Netflix. I don't know if Apple gets any sort of cut (I'll assume they don't) but it places the appliance in regular use at the customer's house. And if Apple ever "flips the switch" and offers a more compelling offering, they may steal customers away from Netflix. Even as-is, there will be times when someone wants a new release that Netflix doesn't have and the iTunes selection is just a few clicks away.
2) As others have said, Netflix's selection is huge, but older. You're not going to stream a brand new release via Netflix. Some have stated that for the cost of two iTunes rentals, you've paid for your Netflix subscription. While I don't disagree that, at this time, Netflix is worth it (for its huge selection of, albeit older, free movies and TV shows), many/most of those movies you'll find in the iTunes store for 99 cents ($1.99 for HD), not the $3.99/4.99 price that Apple charges for new releases (which Netflix doesn't even offer). So, the TCO is actually quite different. IMO, Netflix's PQ leaves a lot to be desired, even in HD, so let's compare this to Apple's SD prices. For that $8/month entry Netflix plan, you could rent 8 older movies thru iTunes.
3) Someone referred to iTunes HD movies being "horrendously over-compressed 720p". In comparison to Blu-ray, that may seem true on a technical level. I believe that the size of a 720p movie on iTunes is around 3.5 - 4GB, which is significantly smaller than what a ripped Blu-ray would be. But you won't find a lot of compression artifacts with iTunes movies (compared to, for example, Netflix). Apple seems to do a very good job of optimizing the compression, and my experience has been that their 720p movies look very, very good even when viewed on my 92" diagonal front-projection setup. Granted, my projector is only 720p, and if you are watching 1080p on a large screen (or very close to a smaller screen), you may appreciate the added detail that a 1080p Blu-ray will give you, but I think it's disingenuous to imply that iTunes 720p movies offer poor PQ. Lastly, I think that Apple made the best choice for the time of going 720p and not pushing it for 1080p. They were dealing with their A4 CPU up until just recently and to be able to play 1080p with that, they would have needed to over-compress it. Filesizes would have gotten bigger, too, which would make for longer download times (which are already a point of concern for many Apple TV owners who don't have super-fast internet speeds). And Apple's vision for iTunes HD wasn't simply with watching things on a big screen. They want people renting/buying to watch on their iPhone/iPod Touch/iPad, and the resolution of those devices is such that a user would see no improvement in PQ with 1080p, whereas they would get hit negatively by the movies taking up more of their limited storage space.
4) The 2nd gen Apple TV has primarily been marketed by Apple as an accessory to an iOS device. There have not yet been any commercials showcasing the Apple TV by itself. It has been shown in the iPad commercials. They price it like an accessory (at $99, it's only $30 more than the leather iPad smart cover, and $60 more than the AV connector). With the millions upon millions of iOS device sales, this strategy makes sense, and the Apple TV becomes an obvious must-have for anyone who is already a part of the iOS ecosystem. If they even sell them to just a small fraction of iOS device owners, they'll sell millions. The installed userbase plus whatever uptick in existing movie/TV show sales they've already started to see from that, will give Apple much more leverage with the movie studios and TV networks. Don't forget about the "subscription" feature that they recently added in support of magazine/newspaper subscriptions. Perhaps that will be leveraged for TV network subscriptions as well. I'd like to see Apple use this leverage to get the prices down and the viewing window increased. I could see them dropping rental prices by a dollar and extending movie watching windows by a day (or at least offer extensions for a $1/day fee). More TV networks will sign on and we may see steeper discounts on a season pass or monthly subscription prices for entire networks. All of this will make the Apple TV more compelling to even people who don't own an iOS device, and many of them will in turn decide to buy an iOS device.
All that said, I'd like to know more about the "Other" category. I suspect that Amazon VOD is a big part of that, with services like Vudu being a smaller part. On the rare occasions that I want to rent a new release and don't want to run out to a Redbox (or they don't have it in stock), I've gone to using Amazon VOD with my TiVo instead of Apple TV/ iTunes, mainly because I had a couple of bad experiences with the Apple TV reporting obscenely long download times and also because our TiVo is still our "input #1" device.
1) As others have noted, a lot of people are using Apple TVs to watch Netflix. I don't know if Apple gets any sort of cut (I'll assume they don't) but it places the appliance in regular use at the customer's house. And if Apple ever "flips the switch" and offers a more compelling offering, they may steal customers away from Netflix. Even as-is, there will be times when someone wants a new release that Netflix doesn't have and the iTunes selection is just a few clicks away.
2) As others have said, Netflix's selection is huge, but older. You're not going to stream a brand new release via Netflix. Some have stated that for the cost of two iTunes rentals, you've paid for your Netflix subscription. While I don't disagree that, at this time, Netflix is worth it (for its huge selection of, albeit older, free movies and TV shows), many/most of those movies you'll find in the iTunes store for 99 cents ($1.99 for HD), not the $3.99/4.99 price that Apple charges for new releases (which Netflix doesn't even offer). So, the TCO is actually quite different. IMO, Netflix's PQ leaves a lot to be desired, even in HD, so let's compare this to Apple's SD prices. For that $8/month entry Netflix plan, you could rent 8 older movies thru iTunes.
3) Someone referred to iTunes HD movies being "horrendously over-compressed 720p". In comparison to Blu-ray, that may seem true on a technical level. I believe that the size of a 720p movie on iTunes is around 3.5 - 4GB, which is significantly smaller than what a ripped Blu-ray would be. But you won't find a lot of compression artifacts with iTunes movies (compared to, for example, Netflix). Apple seems to do a very good job of optimizing the compression, and my experience has been that their 720p movies look very, very good even when viewed on my 92" diagonal front-projection setup. Granted, my projector is only 720p, and if you are watching 1080p on a large screen (or very close to a smaller screen), you may appreciate the added detail that a 1080p Blu-ray will give you, but I think it's disingenuous to imply that iTunes 720p movies offer poor PQ. Lastly, I think that Apple made the best choice for the time of going 720p and not pushing it for 1080p. They were dealing with their A4 CPU up until just recently and to be able to play 1080p with that, they would have needed to over-compress it. Filesizes would have gotten bigger, too, which would make for longer download times (which are already a point of concern for many Apple TV owners who don't have super-fast internet speeds). And Apple's vision for iTunes HD wasn't simply with watching things on a big screen. They want people renting/buying to watch on their iPhone/iPod Touch/iPad, and the resolution of those devices is such that a user would see no improvement in PQ with 1080p, whereas they would get hit negatively by the movies taking up more of their limited storage space.
4) The 2nd gen Apple TV has primarily been marketed by Apple as an accessory to an iOS device. There have not yet been any commercials showcasing the Apple TV by itself. It has been shown in the iPad commercials. They price it like an accessory (at $99, it's only $30 more than the leather iPad smart cover, and $60 more than the AV connector). With the millions upon millions of iOS device sales, this strategy makes sense, and the Apple TV becomes an obvious must-have for anyone who is already a part of the iOS ecosystem. If they even sell them to just a small fraction of iOS device owners, they'll sell millions. The installed userbase plus whatever uptick in existing movie/TV show sales they've already started to see from that, will give Apple much more leverage with the movie studios and TV networks. Don't forget about the "subscription" feature that they recently added in support of magazine/newspaper subscriptions. Perhaps that will be leveraged for TV network subscriptions as well. I'd like to see Apple use this leverage to get the prices down and the viewing window increased. I could see them dropping rental prices by a dollar and extending movie watching windows by a day (or at least offer extensions for a $1/day fee). More TV networks will sign on and we may see steeper discounts on a season pass or monthly subscription prices for entire networks. All of this will make the Apple TV more compelling to even people who don't own an iOS device, and many of them will in turn decide to buy an iOS device.
All that said, I'd like to know more about the "Other" category. I suspect that Amazon VOD is a big part of that, with services like Vudu being a smaller part. On the rare occasions that I want to rent a new release and don't want to run out to a Redbox (or they don't have it in stock), I've gone to using Amazon VOD with my TiVo instead of Apple TV/ iTunes, mainly because I had a couple of bad experiences with the Apple TV reporting obscenely long download times and also because our TiVo is still our "input #1" device.
People don't have to watch TV hours all day for studios to be concerned about how much they're making per view, and whether they're getting enough compared to how much it cannibalizes other viewing including per-view rentals and sales.
And I'm talking about bandwidth in regard to ISPs capping it or slowing down data from specific sources. That will make a difference if the people watching lots of NF now all of a sudden can't stream at a decent quality or start getting cut off because they hit their cap.
Did you even read the articles I linked? Studios gave NF a sweetheart deal three years ago because at the time it was negligible to them. When those contracts expire, they're going to raise the cost to NF significantly, whether NF can compensate for that with more subscribers remains to be seen but everyone seems to think that's extremely unlikely and NF will need to raise subscription prices.
But are NF's content contracts transferable if they are bought out? Maybe, maybe not. And with NF's contracts expiring in the next few months, the next time around they may get offered the same terms that iTunes gets right now, making them no more competitive and pointless to buy if they'll be forced to hike prices way up and end up losing customers.
More likely because they negotiated their streaming contracts earlier, and by the time the others were doing it, the studios realized the big mistake they had made with NF. We'll see what happens when NF has to renegotiate.
Are any of the streaming services offering that? Seems flat out impossible with today's internet connections, and seems ridiculous to expect downloads to be at the same rate as physical disk. Personally I think BD is way overrated, even with the resolution and high data rate I still see plenty of ugly compression artifacts.
Right now pretty much nobody can compete with NF since they seem to be the only one with content contracts that are so cheap. But once those expire and they have to renegotiate, it's entirely possible that they'll be paying the same content rates as apple and everyone else and completely lose that competitive advantage.
The established model of mailing disks seems to be going away in favor of downloads. And NF's download model looks to be unsustainable. We'll see where they're at after they renegotiate all their contracts with the studios.
But it looks unlikely that content will improve drastically, at least not without a major price bump. If anything it may get worse if studios give them access to less content or demand a price bump that NF isn't willing to pay.
Seriously, you consider a fail anything less than Apple SENDING DISKS IN THE MAIL? Please tell me you're joking. Please.
Now that I've had Netflix for a few months I think this would be highly convenient. However, this can't happen until ISP's get their act together with regard to bandwidth. I don't think this is as much of a problem for you guys in the States as it is here in Canada, where the major ISPs (who, by the way, also own the satellite TV and cable companies) only typically allot 25 to 60 gigs of monthly bandwidth usage. Going over your bandwidth can get very expensive.
As a result I have to track how much Netflix I'm watching for fear of using up my bandwidth too quickly. And if I find that I'm streaming a movie more than twice, I have to seriously think about whether I should just go out and buy a copy on DVD instead, or downloading on iTunes (download once, play as many times as needed).
Personally I would enjoy some kind of compromise -- a Netflix streaming box with a 200 gig movie cache, for example, so you don't have to restream recently played movies if you want to watch them again.
Our smaller ISPs are trying to sell 300 gig and unlimited bandwidth packages but they are receiving severe resistance from the big players.
do you still not understand the concept here? You are STILL comparing Blu Ray to streaming content. It's not a fair comparison. Why is this concept so difficult to grasp?? You're still comparing physical media with streaming content.
It's not gonna be equal duh.
It's a perfectly fair comparison, considering the figures being presented are NUMBER OF MOVIES STREAMED, with no regard whatsoever for number of customers.
If your assertion was correct, 90% of the pie would be split evenly between Apple and Amazon, since they have 300 million accounts with credit cards, all of which have the ability to stream content, whether they choose to use it or not.
So, you're saying that downloads are low quality.
No argument there.
once again, you choose to ignore the real facts. Who said it was low quality? 720p HD isn't low quality. But hey, you're probably one of those guys too that says APPLE FAIL for not doing 1080p device eventhough none of the content can be streamed in 1080p.
again, like i said before. People are settling for it bc they are forced to have it with their netflix accounts. almost every device out now has netflix included. once the people get on there and watch a handful of movies they will notice that the content sux overall. i've had many friends that have tried the streaming and most would like them to offer the dvd only unlimited plan again. but again, it's forced on the customers so of course a lot of them are just going to go along with it.
It is when it is overly-compressed low-bitrate. It's not the number of pixels (although 2 million pixels is better than 1 million pixels), it's the spatial and temporal compression necessary to achieve reasonable download sizes.
Why is that? Certainly 1080p content can be streamed, no physical reason to prevent that.
Netflix gives me the option of either choosing high quality discs, or low quality downloads. For one low monthly price.
Apple has no high quality option, and makes me pay per low quality download. That's the fail.
Not so much. I've got a handful of $39 Seagate Theater +s scattered around the house. They also do 1080p. Not as pretty UI, but they work just fine. I'd be really surprised if there weren't even cheaper boxes out there. Surely Netflix is on some $20 DVD player somewhere.
Define "quality". Just because it came out last week doesn't mean it's quality. It's just newer crap.
How about, it's the cheapest way to get Netflix that the average person will have heard of. Though, to be fair, Apple hasn't gone out of their way (yet) to advertise the Apple TV or its Netflix functionality.
No, Netflix streaming isn't as good as Blu Ray...but when you factor in how much it costs, then it doesn't matter.
The difference is that Apple is charging $5 to stream an HD movie, while that is basically half of what you get with a Netflix subscription, and with that subscription, you get so much more bang for your buck.
The difference is that Apple is charging $5 to stream an HD movie, while that is basically half of what you get with a Netflix subscription, and with that subscription, you get so much more bang for your buck.
Thanks for the link and inf about Zediva.
If they call the service something different than streaming they might generate a different perception about what their service is.
How exactly the video out of the DVD player is converted or transmitted over the Internet? This is 480p only? What about the audio quality?
Do they offer BluRay rentals also?
How different is this from a pay per view rental in a hotel room? Or in an airplane?
Anyone knows what Zedivia means?
Very nice to see new players in this game.
Yesterday I saw for the first time a redbox style Blockbuster DVD rental machine at a local grocery store, it only have DVD, once I realized that there was no BluRay I stopped looking at it.
If they call the service something different than streaming they might generate a different perception about what their service is.
How exactly the video out of the DVD player is converted or transmitted over the Internet? This is 480p only? What about the audio quality?
Do they offer BluRay rentals also?
How different is this from a pay per view rental in a hotel room? Or in an airplane?
Anyone knows what Zedivia means?
Very nice to see new players in this game.
Yesterday I saw for the first time a redbox style Blockbuster DVD rental machine at a local grocery store, it only have DVD, once I realized that there was no BluRay I stopped looking at it.
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We've had them for quite some time in our area and the one's around here do have BD as well. The problem isn't so much the kiosk, it's the app. I have since deleted it from my phone, so maybe they've changed it but the BB app wouldn't allow you to reserve movies from the kiosks, nor from any of their stores. It simply let you look up movies at a store, one location at a time and then CALL the store to ask them to hold it for you. How ghetto is that??
By contrast, the Redbox app allows you to search first by movie and shows which kiosks in your area (by zip or gps) have the movie. You reserve & pay for it right through the app for DVD or BD. BB doesn't need bankruptcy protection, they just need to go away. They have no clue what this industry has turned into or what we want.
One aspect that's not getting much discussion in this thread is around the content owners, the movie studios. They hate Netflix & Redbox because of the price point but are in somewhat of a bind because we as consumers love that model. The compromise now seems to be that many of them only allow release through the "premium priced channels" ($3-$6 price point) for the first 30 days or so and then release it to the bargain channels. To be honest, I'm fine with that. I have a busy enough life that I can wait the extra time. Netflix and Redbox rule the bargain channel (Amazon entering this game, but has a steep hill ahead of them). Apple, Amazon, cable companies, and others are fighting for that premium space and also the digital purchase space.
Will be interesting to see how this continues to develop.
Yes put Apple TV can not stream MKV, FLV, DIVX, XVID, MPEG1, MPEG2 or MPEG4 in 1080p (only 480p to Apple TV) and H.264 in 1080p (only 720p to Apple TV).. PS3 or 360 is not overkill but better because you can stream any video or music that stored on your Mac not just in iTunes or iPhoto.. Plus I can PLAY GAMES long with blu-ray (PS3) and DVD movies, some thing the crappy Apple Tv can not do..... Also having 7 kids two being girls we need to have more then one PS3 in the house.. So again it is not overkill... So Apple TV is a joke..
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