Macopinion

AppleTV / iTunes, Part 2

by Marc Zeedar macopinion@designwrite.com

Last time I wrote about the significance of Apple's new movie rental business and how it will change the industry. Today I am going to look at several aspects of rental pricing, a contentious aspect of iTunes.

Pricing
Of course rental pricing is one of the biggest stumbling blocks of a download service, especially compared to "all-you-can-eat" subscription plans from Netflix and Blockbuster. Why pay $3-$5 per movie when Netflix gives you "unlimited" rentals for $20/month? (It's only unlimited in the sense that the maximum is dictated by how fast you can watch and snail mail return the discs for new ones.)

Recently Netflix even announced they are expanding their own digital download service. Now subscribers get all the downloads they want for no additional fee!

I have no idea how Netflix can support this. Surely the bandwidth has a cost and the studios would want a fee for each download (Apple supposedly makes very little on downloads), so I can only assume that Netflix is doing this at a loss to promote their download service and keep customers from defecting to iTunes. The interesting twist is that if the movie studios are cooperating with Netflix to offer flat-rate viewing, then that is something Apple could negotiate as well.

Unfortunately Netflix's "instant viewing" feature is only for Windows users as Netflix foolishly built their system upon Microsoft's proprietary DRM. This is a kick-in-the-teeth for Mac users who pay the same subscription fees but don't benefit from the service.

I've been a Netflix user/subscriber since they first launched and I've generally been happy, but this is the final straw that might have me kicking the company to the curb. Here is a copy of a letter I recently sent the company:

An Open Letter to Netflix

I have been a pretty happy Netflix subscriber for *many* years. (If you check your records, you should see I started using your service near the time you first launched.)

However, I am *extremely* frustrated at the current direction Netflix is taking. You have started a new "instant viewing" service that is unavailable to me. I am a Mac user. I do not have Windows and have no interest in having Windows. You've had a year to make your service Mac compatible and I see no evidence or information on your site that you intend to do that.

Now I read in a news article that you are expanding your "instant viewing" service and making "unlimited" downloads available to subscribers for no additional cost. I am a subscriber and yet I cannot use this feature because you are penalizing me for being a Mac user. This is Unacceptable.

I demand either that you offer me the same services you offer everyone else OR you give me a discount on my subscription. Otherwise I am paying for a service that I cannot use! That is discrimination and you will face lawsuits, I guarantee it.

If you do not do either of these things, I'm afraid I shall have to cancel my subscription.

Please let me know what you intend to do.

-- Marc

I haven't heard back and doubt I will, but I am curious as to what the company would say. It's not their fault that Microsoft won't make their technology cross-platform and there's nothing Netflix can do to solve the problem. (They could engineer a Mac-specific solution, but that might be too expensive.)

But it is Netflix's fault for choosing proprietary technology. There are open source cross-platform DRM solutions available Netflix could have used. (This is the same problem the BBC is having with their video download service and there it sounds like Microsoft may have "influenced" the decision-makers.)

As a big consumer of video content (I have satellite TV, multiple Tivos, and own over 600 DVDs, in addition to my Netflix subscription), I have a significant interest in video downloads, but I am not sure where the market is going.

I previously wrote that I'm tied to DirecTV because it has the soccer packages I want, and I love my Tivos and Netflix, but the whole HDTV situation has me frustrated. To get HDTV means all new equipment. I'd need a new Tivo, a new DirecTV box, and I'd have to pay more per month for the service. Video downloads would minimize that: no need for Blu-Ray player, new AV receiver, just an AppleTV box. That is tempting.

I find I don't use Netflix as much as I should, so I'm probably paying more than $3 a movie some months, and I should re-evaluate my situation. The only thing keeping me with Netflix right now is the size of their catalog, which I doubt Apple can match any time soon (60,000+ DVDs). Also, Apple doesn't mention renting TV shows, so apparently that's not supported. (Sad, as renting's a good way to catch up on shows you've missed and DVD season packages are hideously expensive.)

Still, with AppleTV dropping in price, I might consider reducing my Netflix membership to fewer discs at a time and put the extra money toward a couple iTunes rentals. With Netflix I could rent "stupid" movies that aren't worth $3 (most of them) or rare content that's not available on iTunes. Fun blockbuster type new releases might be worth $5 to get them in HD on the date of release.

I also occasionally use Tivo's movie rental service via Amazon Unbox. Unbox is not Mac-compatible but I can download the video straight to my Tivo with a remote control similar to AppleTV. Most Unbox rentals are $3+, but occasionally there are sales and I get a film for $1 or $2, which isn't bad.

While AppleTV's content is initially limited, it will grow, and if I could find sources for the content I'm interested in, it could eventually erase the need for 90% of my present video sources.

Another option, albeit not exactly ethical, is that I understand there are solutions to "automagically" move Bit Torrent downloads to your AppleTV for viewing on your big screen. Video on the computer does not interest me much -- I far prefer to watch TV on a TV.

In short, we're in the middle of a massive media transition. The video download market is nowhere as mature as the digital music market. It's the Wild West, right now. But I do like the directions Apple is going. If the media companies would release the handcuffs and allow Apple to do what they really want, the results would be astounding. Instead, as usual, it's the lawyers who are hampering progress. But it will come. Just be patient.

macopinion@designwrite.com