Apple and Netflix

The Apple-Netflix relationship is an interesting one. Techwitty has been given the green light on funding several more development ventures this year. Apple obviously has an interest in Netflix given that the Netflix app on the new Apple TV is quite probably one of the major reasons (together with the $99 price point) why the device has sold so well. Netflix will have an interest in Apple given that the majority of Apple TV purchasers will sign up for a Netflix account. One analyst has even noted that Apple should just go ahead and buy Netflix instead of trying to compete with them. A good idea?

Analyst Brian Marshall has suggested that, on a daily basis, Netflix rents over 10x the volume (around 5 million rentals) of streaming media compared with Apple. Fair enough. Netflix has been around a lot longer than the new Apple TV rental model and half a million rentals a day for Apple is nothing to sniff at. But Apple can offer premium movies for rental whereas the Netflix library, while offering many new movies, tends to offer predominantly older titles on it’s streaming service. So where would the happy medium be?

If Apple were to buy Netflix, then they may gain control of the entire Netflix library and, subject to limitations placed by studios, would be able to offer all of the features that Netflix does. A hybrid payment system could then put in place whereby consumers could pay a monthly fee for the streaming library, yet still have the option to rent premium or new movies or sporting events for a small fee (in addition to the monthly fee). It’s worth thinking about and it would mean that users wouldn’t have to use two seperate media services on their Apple TV to find the content that they want to watch.

It could happen. Remember that Apple bought Lala, then shut it down with rumors suggesting that this was because Apple is working on it’s own music streaming service to be launched in the near future. A Netflix acquisition could go along the same lines. However, Netflix is an enormous company, with revenues thought to have exceeded $2 billion in 2010. Combine this with the fact that the Apple TV rental model seems to be working well and there would be little reason for Apple to offer a new system of their own on the Netflix model of a monthly subscription for unlimited streaming.

The coming months will be key for Apple as they seek to build upon their rental model and gain traction on the streaming media market. However, if Netflix continues to pull in such massive revenue then it would be interesting for consumers if Apple were to take a little more aggressive approach.

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