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Will Apple Kill Netflix?

It was really just a matter of time.

Apple (Nasdaq: AAPL  ) has taken on computing giants, music industry behemoths, and even Hollywood fat cats with ease in recent years. There's no reason to break a sweat now as it bumps up against the mom-and-pop DVD rental shop, even if it means also going mano a mano with Blockbuster (NYSE: BBI  ) and Netflix (Nasdaq: NFLX  ) .

Published reports in both Financial Times and The Wall Street Journal claim that News Corp.'s (NYSE: NWS  ) 20th Century Fox has inked a deal with Apple to provide video rentals through the iTunes storefront. There's little reason to doubt the stories, especially since The Journal is owned by News Corp. itself.

Steve Jobs can't be happy, as he was probably saving this little nugget for next month's MacWorld conference. It's also just desserts for Jobs after he settled to shut down a popular Apple rumor site last week. You can take down, but it only means a chatty Rupert Murdoch will take its place.  

Details of the Fox deal will no doubt be fleshed out in living color during MacWorld, but for now, we can only speculate on how digital video rentals will impact the rest of the industry.

Conventional providers of temporary celluloid probably aren't too worried. (Nasdaq: AMZN  ) has been offering digital rentals -- delivered right into your PC and even your TiVo (Nasdaq: TIVO  ) -- for a year now. Video on demand has been championed by local cable providers for eons.

Apple's success in video sales has also never approached its mastery of digital music. Maybe it's that the files are too big or that the iPod -- and now iPhone -- crowd is too mobile to spend time staring at a small screen. The uncharacteristic failure of Apple TV is another feather in that dunce cap. However, if one of the stumbling blocks for video through iTunes is price, offering rentals at a fraction of the purchased price will definitely help.

Netflix and Blockbuster shouldn't assume that this will be a non-event. Since both companies have been beefing up their own digitally delivered offerings, they're already positioning themselves to compete if instant gratification -- or at least near-instant gratification -- is the new law of the land.

Unfortunately for Netflix and Blockbuster, though, digital delivery levels the playing field. The network of regional distribution centers -- and in Blockbuster's case, its fleet of thousands of stores -- has helped the two vanquish less committed entrants like Wal-Mart (NYSE: WMT  ) on the mail-order front, but Web-delivered flicks toss everyone into the same starting line, with cutthroat pricing likely. Blockbuster and Netflix have long lists of film buffs and their preferences, but the same can be said of Amazon and Apple.

In short, tomorrow is coming anyway, but now it may be coming a little sooner than expected.

A few more Apple dippers for you:

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