Netflix, Blockbuster shares drop sharply after Apple unveils iTunes movie rentals

Apple Store“Shares of movie-rental services Blockbuster Inc. (BBI: $2.73, -0.50, -15.5%) and Netflix Inc. (NFLX: $21.84, -0.93, -4.1%) both dropped sharply Tuesday after Apple Inc. unveiled a new online movie-rental service that it says has the backing of all the major movie studios,” Alexander Davis reports for MarketWatch.

Full article here.

Apple today announced iTunes Movie Rentals featuring movies from all the major movie studios including 20th Century Fox, The Walt Disney Studios, Warner Bros., Paramount, Universal Studios Home Entertainment, Sony Pictures Entertainment, Metro-Goldwyn-Mayer (MGM), Lionsgate and New Line Cinema. Users can rent movies for as low as $2.99 and watch them on their Macs or PCs, all current generation iPods, iPhone and Apple TV. iTunes Movie Rentals launches today and will offer over 1,000 titles by the end of February, including over 100 titles in stunning high definition video with 5.1 Dolby Digital surround sound which users can rent directly from their widescreen TV using Apple TV. iTunes Movie Rentals are priced at $2.99 for library titles and $3.99 for new releases, and high definition versions are just one dollar more with library titles at $3.99 and new releases at $4.99.

In addition, Twentieth Century Fox and Apple today announced Digital Copy for iTunes, which provides customers who purchase a DVD with an additional Digital Copy of the movie. Just like movies purchased from the iTunes Store, an iTunes Digital Copy can effortlessly be transferred to iTunes and then viewed on a PC or Mac, iPod with video, iPhone or on Apple TV.

Apple today also unveiled all new software for Apple TV that allows movie fans to rent movies on the iTunes Store directly from their widescreen TV, and lowered the price of Apple TV to just $229. With iTunes Movie Rentals and Apple TV, users can just click a button on their remote to effortlessly rent movies from a catalog of over 1,000 titles by the end of February, including over 100 titles in stunning high definition video with 5.1 Dolby Digital surround sound, with no computer required.

26 Comments

  1. Don’t understand unless it’s just panic about panic.

    Let’s see, with Apple tee vee you can get a movie – maybe a pretty good picture (DVD quality? For sure?) – and you’ve got 24 hrs to watch it.

    Same thing with Netflix.

    But, with actual DVD in hand – for as long as you want it – you can watch it today, tomorrow, next week, next year.

    So, what’s the panic about? Is it just the image of Steve saying its so. Enough to cause stampede of sellers… er, AAPL sellers, too.

  2. Profit takers, investors looking for holiday sells numbers in the keynote and investors looking for a major iPhone announcement. One would expect the sell off from investors that don’t understand Apple. The WWDC later this year will be the major iPhone announcement venue, when Steve goes into depth on the iPhone SDK plans. Apple normally does not make major sells number announcement before the quarterly earnings report unless the date is close and Oppenheimer has given his blessing to the numbers. Not even Steve questions Oppenheimer’s wisdom in this area of Apple.

  3. If you rent movies at the spur of the moment like my family does, Apple’s new rental service is just the ticket.

    No more loading the family into the car to drive to the rental store.

    If you are a heavy-renter, NetFlix is probably better.

    And by “heavy-renter” I don’t mean renters with BMI over 25.

  4. Netflix still has a place in the Universe and many will still find them a better deal. But Apple’s new rental deal is very different, and offers advantages over Netflix that many will find compelling. Portability is the big one. A download for iTunes plays on TV, iPod, iPhone, Mac or Windows PC. And there is the impulse buy ability that you just can’t get from Netflix, where you have to monitor and load your list up. Frankly, many will find that a combination of both is ideal. Don’t forget that there is much more to TV than movie rentals. It still brings all your personal photos, movies, music to the home entertainment center. Rental VOD was the missing piece of the puzzle.

  5. Exactly as Spark points out. ATV gives you more that what Netflix download rental crap service does. One it works on your Mac! Netflix doesn’t. You have PodCast in HD if you want, Music, Audio, Photo and sharing over the net… Very nice update. Oh and no need for a computer to have ATV now. Another big plus.

  6. The pricing is ridiculous. I can rent a DVD for a whole week (or longer from Netflix) for the same price, and it comes with the DVD extras.

    The answer is obvious in the purchase price. Why do the studios charge Apple almost as much as Walmart for the sale of a movie? Does it cost more for them to encode the film once and give it to Apple than it does to burn thousands of DVDs, package them in fancy custom-printed boxes, and ship them to Walmart? I’ll bet they don’t even have to encode it–Apple probably does it.

    The studios are gouging Apple.

    I wonder if Blockbuster or Netflix pays the studio a cut of every rental? If I rented out to my friends a DVD that I own, am I obligated to pay the studio?

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