Rumored Apple iTV Could Be the Real Threat to Netflix

Over the New Year’s weekend, a friend of mine picked up his daughter from a playdate with my daughter and during the requisite pick-up chat, he remarked “There’s nothing to watch on Netflix. Have you noticed that?”

Why, yes. I have. And maybe it’s not Netflix’s fault. Because I feel the same way when I go to Redbox or DVD Express – the past year has simply not been a great one for movies.

Even so, his comment got me thinking. Because I love the ease of use of Netflix streaming and I love catching up on old episodes of TV shows on Netflix, but I haven’t watched a movie there in a long time, despite the more than 50,000 titles available for streaming. But yet, there’s a lot of talk these days --  even here on this blog -- that Amazon may be the Netflix killer with its shiny happy brand image and video streaming service. Add in the Kindle Fire and the ease of watching video on it, and Amazon seems poised to snatch the streaming video mantle from the once-vaunted Netflix.

But here’s the thing. There’s not much to watch on Amazon either. So maybe Apple — surprise, surprise — is the company Netflix should be worried about.

cache of reports surfaced last week that Apple is getting into the TV manufacturing business this year and may introduce an Apple TV set by mid-2012. Sterne Agee analyst Shaw Wu said in a research note that Samsung and Sharp are making chips and displays for the TV set.

“Frankly, we are not surprised and believe AAPL should enter the TV space as this is arguably the only major end market the company is not currently participating in a bigger way. Moreover, we have picked up several data points indicating activity from component makers to manufacturing partners as well as AAPL’s own patent filings from at least 2005. So far, there is the current Apple TV set-top box appliance which launched in January 2007,” the report said.

But, um, what would we watch on it? Wouldn’t Apple still have to strike licensing deals for such a service? And let’s not forget that licensing deals are complex and hard to come by. But maybe they’re not necessary for the success of such a product. Perhaps the key would be in turning whatever TV Apple makes into a development platform for content providers, just as the iPhone has become a platform for pretty much every TV network to develop on, suggests GigaOm.

And, you know, Apple has already done a fantastic job convincing consumers they must have products they never needed before. To be sure, the Apple TV didn’t quite take off as hoped. But that’s a set-top box. If this iTV comes to fruition, it could be the next iteration of what Apple has done well – make new screens for new experiences.

Apple is what Netflix should be worried about when it comes to streaming video. Not Amazon.

6 comments about "Rumored Apple iTV Could Be the Real Threat to Netflix".
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  1. Markus Vaga from Biolumina, January 4, 2012 at 9:35 a.m.

    Great insight, and I agree that Apple, not Amazon, is the one Netflix needs to be worried about.
    But at the end of the day, Netflix seems to be the only one that allows users to access the whole streaming library for $7.99 a month. Sure we all want to watch the latest release on the day it comes out, but Apple's current plan of renting a single film at $2.99 (even old ones) doesn't make a lot of sense and will get expensive very quickly. They'll need to restructure their pricing for sure once they work out the whole license business.

  2. Todd Koerner from e-merge Media, January 4, 2012 at 3:08 p.m.

    There are so many different issues at play in this question, and one of the first is being dealt with at this moment. Netflix is offering its first original series this month, which will propel it into the ranks of every major studio.

    Granted, Steve Jobs revolutionized the music business not because of the IPod - which was certainly not the first digital portable music player - but because he was able to secure deals with almost every major label. That will be much more difficult when the producers of video content also have a financial stake in the distribution of their wares. And that is where I believe Netflix has a better working relationship with the content creators.

    Another issue that will become paramount is the creation of a intuitive and simple video search feature. It is all text-based at this time, and that will have to change. the question is how...

  3. Ruth Barrett from, January 4, 2012 at 3:11 p.m.

    I watch at least two movies, often three on Netflix a week - French, Italian, Argentine, British, Swedish, - and wonder if as Americans our very low exposure to "foreign" films, coupled with the idea that films are to entertain us, not educate us has resulted in the experience of finding nothing to watch. The last two weeks I watched a documentary about Elliot Spitzer, and one about the New York Times (Page One). There were three outstanding films: Housewife 49, Entre Nos, and Welcome to the Rileys. They addressed humanistically the topics of war (UK), immigration (US), and the role of children in our lives (US). I topped it off with watching again 49UP a documentary tracking a group of UK children every 7 years, this one as they turned 49 years of age.

  4. Trista Perez from @Large Films, January 4, 2012 at 4:21 p.m.

    Interesting topic. I agree with Ruth Ann's comment--Netflix has a TON of content and I'm continually surprised by the real gems available in their library for instant viewing. (Just recently watched a documentary on Harlan Ellison that I hadn't heard of before finding it on Netflix.) Some of us want more than blockbusters.

    I'm one of those folks that Apple has NOT convinced to get an iPhone, so I'm definitely intrigued by what Apple iTV has to offer. Not ready to drink the kool-aid, but I want to know what the flavor is about...

  5. Lela Cocoros from Brunswick Street Advisory, January 5, 2012 at 1:16 p.m.

    I agree with Ruth Ann and Trista - While I would love to have even more films available via Netflix streaming, there are a lot of great films already there. Over the holidays I watched Bob le Flambeur, a 1950s caper noir that's pretty classic. I still subscribe to the DVD by mail service becuase I'm a "long tail" film enthusiast and still need access to those obscure ones that are not streamed anywhere.

  6. Todd Koerner from e-merge Media, January 5, 2012 at 5:15 p.m.

    Some anecdotal evidence, but little substance in those last few comments. Try to extrapolate to the millions watching Judge Judy, Ellen, Cops, Dr. Phil, etc. That is a much more representative sample.

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