Netflix Just Gave iTunes A Big Fat Kiss

glitter lips by snowkeiA new movie came out on DVD this week called The Invention Of Lying. It’s co-written, co-directed, and co-starring Golden Globe host Ricky Gervais and looks mildly entertaining enough that I want to rent it. So I load up Netflix to add it to my queue — but wait, according to Netflix, it’s not available until February 16. Why? Because it’s a Warner movie and as such is subject to Netflix’s idiotic new 28-day rule (they can’t rent Warner new releases on Netflix until after they’ve been available for purchase in retail store for 28 days). Well that’s just great. So all hope is lost, right? Nope. iTunes has it available for rent today.

Because Apple did not agree to enter into a deal with Hollywood that restricts them from renting movies during this 28-day window, it was available not only to buy but also to rent this past Tuesday on iTunes, the same day it was released on DVD. While iTunes has its own series of somewhat convoluted rules with regard to rentals (for example, some movies are restricted from being rented when airing on premium cable channels like HBO), in this instance, they hands down beat Netflix at their own game: rentals. And thanks to this new 28-day window, which the other major studios will undoubtedly have interest in getting from Netflix as well, this is something we could see a lot more of: iTunes, Amazon, Xbox Live, and yes, even Blockbuster Online being the go-to sources to rent new releases.

And that’s great news for those services which haven’t yet seen the rush of popularity that Netflix has enjoyed over the past several years. But Apple COO Tim Cook noted in an earnings call last year that iTunes movie rentals were a surprisingly strong part of the store and were helping drive Apple TV sales. People seem to like the idea of renting movies over iTunes, they just needed an incentive to do it more. This is it.

Sure, for a lot of people, a 28 day wait after waiting months for a movie to be released isn’t the end of the world. But a solid 30% of Netflix’s business is still people who rabidly want new releases when they come out. With Netflix no longer offering that option, they will turn elsewhere — and I don’t mean buying these movies. If they’re opposed to piracy (which will go up as a result of this window if all the studios get on board), they’ll turn to one of Netflix’s rivals in rentals. And with these companies’ living room hardware getting upgrades this year (Xbox in talks to get ESPN content, Apple TV likely to see a major upgrade, etc), there could be very enticing options. Not to mention a certain new Apple device likely getting unveiled next week that will probably support movie rental playback as well.

I understand why Netflix felt the need to cut this deal: on one hand, Hollywood was strong-arming them in a futile attempt stop their own DVD sales bleed. On the other, they want to secure what they believe is their future: streaming. But they’ve given their rivals a real opportunity with this 28-day window. Hopefully, one of them will take advantage of it.

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[photo: flickr/snowkei]