Who's Winning the Streaming War?

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It began with an episode of Gilmore Girls.

A friend made an obscure reference to the show one evening, and set about trying to locate an episode on the Internet. The show wasn't included in Amazon (Nasdaq: AMZN  ) Prime, the company's shipping and streaming club, of which she's a member. So she tried to buy it. When she ran into difficulties, I turned to Apple (Nasdaq: AAPL  ) iTunes and also attempted to download the show.

What resulted was a tortoise and the hare race to the finish. Who won says a lot about the future of streaming.

Something for nothing?
Gilmore Girls ran from 2000-2007 and landed places on Entertainment Weekly's "New TV Classics" list and TIME magazine's "100 Best TV Shows of All Time." In other words, not an obscure show, and not predigital. I expected locating it to be fairly easy.

As my friend logged into her computer and I into mine, I thought, "Surely this is free somewhere." After all, most of the major players announced new content deals this weekend, including Hulu, owned by Comcast's (Nasdaq: CMCSA  ) NBC, News Corp.'s (Nasdaq: NWS  ) Fox channel, Walt Disney's (NYSE: DIS  ) ABC, a private equity firm, and the Hulu team, which announced a new deal with the CW channel; Google's (Nasdaq: GOOG  ) YouTube, which has secured content deals for exclusive celebrity and branded content; and Netflix, which announced it had renewed its current deal for ABC, ABC Family, and the Disney Channel. Amazon also announced a licensing agreement for ABC, ABC Family, and the Disney Channel, as well as Marvel comics.

But neither Hulu nor YouTube carries the show, nor did my friend's paid subscription to Amazon Prime. We ruled out Netflix (Nasdaq: NFLX  ) immediately. I canceled my membership recently, but even if I hadn't, it wouldn't have mattered. The Red Envelope doesn't offer Gilmore Girls via streaming. (Foolish colleague Robert Eberhard says the lack of streaming Gilmore Girls is why he canceled his Netflix account, but I suspect he was kidding.)

Had we thought of it earlier, we could have checked the DVDs out for free from my local library, which carries the entire series. But it was too late. That left paying. This is how it went down.

One at a time or all at once
On Amazon, my friend had the option to either purchase the episode for $1.99 or the season for $15.99. As an indicator of the obsolescence of DVDs, she also had the option of purchasing the box set of the season new for $24.99 or used for $18.99. At iTunes, my purchase cost $2.99 but downloaded both the HD and regular versions.

Content (availability) is king
Most streaming options fall into three categories: watch for free, watch as part of a monthly or annual subscription (such as Hulu Plus and Amazon Prime), or purchase. But the future may be in an untapped market: rentals.

Until this past August, iTunes offered customers the option of renting television shows. I rented Monty Python and the Holy Grail a few years ago, and was quite pleased with the process. But claiming customers would rather own than rent, Apple nixed the option. YouTube is trying out movie rentals in beta, and may be the sleeper winner of the streaming wars. Had the episode we wanted been available on YouTube, we would have bought a 24-hour pass, no questions asked.

Rent or own
The decline of Netflix this summer taught us two things. First, that strong corporate communications is key. Second, that the streaming industry is changing, and no one knows for sure what it's going to look like. For a streaming plan to be fully successful, it needs to be fluid and offer instant gratification. Our troubles with iTunes and Amazon would have led us to another platform, had there been one which offered the show for free, or as a rental. Neither of us would have bought another monthly subscription for one show. It was a whim we wanted to indulge, not one we wanted to be committed to forever.

And the winner is...
So who won the race to download? My friend. She was able to download the entire season from Amazon while my single episode was still downloading from iTunes. And I'm stuck with an episode of Gilmore Girls which I will probably never watch again. Ultimately, Amazon was simply easier, faster, and less expensive than iTunes.

There's got to be a better way. Here at the Fool, we've taken a hard look at the future of video on demand, and what it means for global communications. In fact, we've deemed one company working in the streaming field as The Motley Fool's Top Stock for 2011. Want to know which one? Check out this special report. Download a copy on us; it's free for Fools.

Create a race of your own by adding these companies to My Watchlist. 

Fool contributor Molly McCluskey doesn't own shares of any of the companies mentioned. You can follow her on Twitter at @MollyEMcCluskey. The Motley Fool owns shares of Apple and Google. Motley Fool newsletter services have recommended buying shares of Netflix, Google, Apple, Walt Disney, and Motley Fool newsletter services have recommended creating a bull call spread position in Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (13) | Recommend This Article (8)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On November 01, 2011, at 1:40 PM, H3D wrote:

    From decision, to starting to watch, on iTunes can take several seconds.

    How much faster can that be on Amazon?

  • Report this Comment On November 01, 2011, at 1:43 PM, Towergrove wrote:

    " As an indicator of the obsolescence of DVDs, she also had the option of purchasing the box set of the season new for $24.99 or used for $18.99"

    I'm confused how is this an indicator of DVD being obsolete? Again I'm confused??

    The studios would rather you purchase your media not give it away for free.

    BtW it was announced yesterday that for the first time since 2008. Home entertainment sales are up around 5%.

  • Report this Comment On November 01, 2011, at 1:55 PM, XMFAlaska wrote:

    Towergrove: As an indicator that DVDs are becoming obsolete, it's now cheaper to purchase downloadable media than it is to buy the physical disc.

    H3D, I'm a huge MAC fan (own two) but have never had a tv show or movie download to my iTunes in seconds.

  • Report this Comment On November 01, 2011, at 3:15 PM, Towergrove wrote:

    TMF wouldn't that be due to the fact that it costs more for packaging? That's hardly an indication of a product being obsolete.

  • Report this Comment On November 01, 2011, at 3:43 PM, XMFAlaska wrote:

    Hi Towergrove. The price difference was nearly $9; that's a lot for packaging. But you're right; the disparity between streaming and box set as an indicator for obsolescence was my interpretation. It's one I stand behind, but I can see not everyone would agree.

  • Report this Comment On November 01, 2011, at 4:14 PM, Borbality wrote:

    seems like Netflix pretty much ALREADY HAS IT RIGHT regarding rentals. Not sure what the big deal is. Sometimes you have to wait one day for a disc to show up, and you can't watch a disc after you've already sent it back, but geez, that's getting picky.

    I'm sure it'll improve in a few years, but also right now streaming just does not compare to a good DVD or Blu Ray disc. I'm not one to enjoy having (or paying for) collections of the things, either, so Netflix works out very nicely.

    Downloading whole seasons would be cool but I imagine that's a lot of gigabytes, and most of us are trying to move away from PCs and storage. Maybe we could buy the ability to stream something on demand. But that's already netflix! Just keep up the content and NFLX is fine.

  • Report this Comment On November 01, 2011, at 4:36 PM, chadhenage13 wrote:

    I think there is some confusion. Based on the title "Who's Winning the Streaming War?" I don't think everyone uses the definition of streaming the same. Streaming in it's purest sense is you go to a web site or a program like iTunes and you click on what you want to watch and it starts to play. By that definition everyone failed. As you correctly said if you want to indulge a whim you don't get very far on certain things. After all buying a whole season or even one episode is a waste of money in 99% of the cases. After all who wants to watch epidode x of season x of just about any show.

    I believe that NFLX and HULU as well as AMZN Prime are the real streaming competition, but once it's not available to watch as a stream and you have to pay for it separately then it's simply a competition of how do you pay for entertainment media. If we are making that comparison, then companies like Target, Walmart, BestBuy, etc should all be thrown in the mix. After all you could likely buy seasons of shows at any of these retailers and while getting in the car and driving is a different experience then downloading you are making a separate purchase for each item you want to watch.

    Likely NFLX, HULU and AMZN are the real racehorses here but we are too early in the game to be able to stream everything that people want.

  • Report this Comment On November 01, 2011, at 5:23 PM, KeenSkeptic wrote:

    How did Vudu not make it into this 'race'? I've rented streaming movies from there a few times myself.....

    For my 2 cents, I think that the future of streaming is going to go to whoever can transform streaming shows, movies, and sports events into something more like a la carte cable tv. With that paradigm you can tap into the $50-$150+ monthly budget that people already spend on their cable / satellite provider bill.

  • Report this Comment On November 01, 2011, at 5:33 PM, KeenSkeptic wrote:

    Follow-up........Gilmore Girls is not on Vudu. Carry on.

  • Report this Comment On November 02, 2011, at 5:14 PM, dougnunes wrote:

    I'm an Amazon Prime member and could not download Gilmore Girls for free its not included. I could pay 19.99 for the whole season, but how does that beat Netflix. Seems your knee slap move from Netflix will cost you more that just paying the piper. DVD is ok with me.

    You will not slither back to Netflix because you have made too many dumb hit on them. But most people will be back just for the non-tech abilities of most of us. Easiest way to get to the tv without big cost lay out. And Netflix is a bargin for both streaming and rental of blu-ray. A non-hysterical satisfied Netflix customer. Glad to have had free streaming while Netflix improved the product. I expected to pay for what I got.

  • Report this Comment On November 03, 2011, at 4:05 PM, TMFBoomer wrote:

    TMFAlaska…A couple of comments from a fellow Fool:

    1) Insightful article!

    2) I’ve known Robert for 3 days and I’m convinced he also enjoys GG.

    3) Check out this website.

    It shows where you can stream, rent, download or buy movies. Pretty cool.

    (Note: Currently only movies are available, but hopefully they add shows like GG soon)

  • Report this Comment On November 09, 2011, at 2:54 PM, XMFAlaska wrote:

    Hi dougnunes:

    You're right, I probably won't be slithering back to Netflix anytime soon for too reasons. First, I don't tend to slither often, preferring to save it for special occasions. Second, there are many other options about there that suit my needs, as I believe I've outlined in a very rational way. But I appreciate you pointing out my hysteria; I wasn't aware of it. And after some time weeping in a closet and screaming at the elderly, I believe I've gotten it out of my system. Thanks for your constructive feedback. Such input makes us all better as human beings.

  • Report this Comment On July 09, 2012, at 9:25 AM, igald wrote:

    You should also check-out

    It compares prices and check availability on Amazon Instant Video, Netflix & iTunes.

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