AFI BLOG: Media and Technology

Apple’s Entry into Movie Rentals Is Good for NetFlix and Bad for Blockbuster - Seeking Alpha

There was a very interesting omission in the coverage of Netflix’s (NFLX) decision to allow most users to stream unlimited internet content. The omission? The word Blockbuster (BBI).

Under the most popular plan that charges $16.99 per month to rent up to three DVDs at a time, Netflix customers can currently watch as many as 17 hours of entertainment each month on the streaming service, dubbed “Watch Instantly.” Now, all but the $4.99 a month plan subscribers will be able to stream as many movies and TV shows as they want from a library containing more than 6,000 titles. There will be no additional charge for the unlimited access.

What word has replaced Blockbuster? Apple (AAPL). This is both very good news for NetFlix and very bad news for Blockbuster. Apple will be offering 24 hour downloads for $3.99.

This will obviously cause the fees Netflix pays to Hollywood and for bandwidth to jump, but it should also mean fewer DVDs sent in the mail, which would lower some logistical costs and postage.

Blockbuster has been pushed to virtual oblivion as they are still toying with the download service and stuck trying to figure out how to get people to go to stores in conjunction with a download. Am I the only one who just does not get this? Isn’t the very reason to do one so that you do not have to do the other?

While the competition is taking it to the next level, Blockbuster is still in the starting blocks.