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Netflix Coming to AppleTV?

31 Aug, 2010 By: Erik Gruenwedel

Apple Inc. is reportedly set to add Netflix streaming to a revamped Internet-connected AppleTV to be bowed at media event Sept. 1 in San Francisco.

Bloomberg News reports that Cupertino, Calif.-based Apple will make the announcement when it unveils a less-expensive AppleTV model retailing for less than $100.

If true, the news would not be unexpected considering Netflix content streams, which require a separate subscription, are already available via the Apple iPad, iPhone and iPod Touch.

Indeed, inclusion of the Los Gatos, Calif.-based online DVD rental pioneer’s streaming service to AppleTV is actually playing catch-up to consumer electronics/gaming industries already inundated by the service offering.

Noteworthy, however, is that Apple CEO Steve Jobs is apparently taking Web-based TV seriously again after infamously dismissing AppleTV as a “hobby” a couple of years ago.

In addition, previous media reports said Apple is also looking to offer digital content rentals from 99 cents for a 48-hour period — a move that could undercut the burgeoning $1-per-day kiosk business model.

“Let’s see which content,” said Michael Pachter, analyst with Wedbush Morgan Securities in Los Angeles. He believes Apple is interested in TV programming, which is not offered in kiosks. “I think Apple is looking for [catalog] stuff.”

Eric Wold, analyst with Merriman Curhan Ford in New York, said the caliber of episodic TV content would determine whether AppleTV could compete with Netflix.

“Ninety-nine cents for one episode is still more expensive (if a heavy user) than $8.99 per month for unlimited viewings on Netflix,” Wold said.

Ralph Schackart, analyst with William Blair & Co. in Chicago, said the impetus for studios to play ball with Apple is underscored by the ongoing closures of national rental chains such as Movie Gallery, Hollywood Video and, to a lesser extent, Blockbuster.

“A studio has a stronger economic incentive to capture 80% of a 99 cent [digital] rental because that economic [margin] is more than they are paid by the traditional rentailers,” Schackart said.

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