Steve Jobs and Reed Hastings are passing ships in the sea of discounted video.
Just days after Netflix (NASDAQ:NFLX) announced that it would stop selling pre-viewed DVDs it no longer needs (for as little as $5.99 apiece), Apple (NASDAQ:AAPL) is rolling out a selection of $4.99 digitally-delivered films.
The selection of $5 movies on Apple's iTunes is slim, and loaded with older titles, just like the closeout bin at your local discount department store. St. Elmo's Fire? Total Recall? Ugh!
That's pretty much the point. Apple doesn't want to begin marking down new releases. The studios wouldn't let that happen. However, in these tight economic times, even the mighty Apple has to offer a clearance bin.
Jobs? Hastings? Who is right? Neither.
I'm not a fan of Netflix's decision to dump its excess inventory on wholesalers, especially since it may force DVD buffs to trek out to rival Blockbuster (NYSE:BBI), where the marked-down pre-viewed bins are waiting.
Following that logic, I should be a fan of Apple doing its part to make sure that fans of Web-delivered flicks can find hot deals at iTunes. I'm not, though. If Apple is willing to meet freeloaders halfway, that's really just a stepping stone toward free flicks in the future. Netflix offers Web streaming to subscribers at no extra charge. Google's (NASDAQ:GOOG) YouTube is now teaming up with movie studios like MGM -- owned by a group that includes Sony (NYSE:SNE) and Comcast (NASDAQ:CMCSA) -- to stream catalog titles for free in an ad-supported format.
Apple isn't necessarily competing with those guys. There's a big difference between a Web-tethered stream and a physical download that becomes portable. However, by entering the battle for customers' hard-earned Lincolns, Apple may be inadvertently lowering the perceived value of digitally delivered flicks.
Apple has been successful in music because it has largely stuck to its rigid album and song pricing. An Apple that compromises isn't just sensitive. It's vulnerable. Those are traits you may want in a spouse, but not in a growth-stock investment.
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