So, Apple does a lot of things right. The Apple TV and iTunes combo offers an “it just works” environment that many people seem to like. So why are they having trouble getting their video content out? Recent market research from the NPD group shows that Apple’s iTunes video delivery is in a three-way tie for third place at only 4% market share, while Netflix is way ahead at 61% and Comcast is second at 8%.
Apple has been in the video business since 2006; in 2008, they began to offer rentals, which seemed to help somewhat; and in 2010, iTunes started to carry $0.99 TV shows rentals. This recipe should have their numbers a bit higher than 4%, right — given their dominance in the music sector? Just as iTunes and Apple TV make for a convenient way to sync media across the network for people who own them, it’s also much more convenient to use Netflix on one of the many streaming devices out there. This of course is due to Netflix’s expansion into streaming boxes like Boxee and Roku, and offering playback on all three of the big gaming systems. They still do physical rentals, but that is declining in favor of streaming.
What’s even more interesting is that Netflix streaming doesn’t even have the best selection of movies, but people love it anyways. The survey found that customers know iTunes has more up-to-date content, but the convenience of Netflix ranked highest in terms of “overall shopping experience” and “value for price paid.” Once again, it’s the convenience. It doesn’t make sense for someone to buy an Apple TV if they own any game system at all, even after Apple lowered the price to $99.
In order for Apple to be successful, they need to have it make sense for someone to use the iTunes Store, and that won’t happen unless they open it up to more devices, just as Netflix did. But I think we all know that’s not likely to happen.