Doesn't Netflix (Nasdaq: NFLX) have enough problems to deal with right now? The embattled online video streamer may soon have to go head-to-head with another heavyweight: Apple (Nasdaq: AAPL).
The Wall Street Journal reports that Cupertino is at the bargaining table with various Hollywood studios to stream purchased movies to an iPhone or iPad near you. The service would probably be integrated into iCloud, which was just released to the masses yesterday. Netflix has long been a mainstay on iOS devices, through its iOS app and built-in Apple TV support.
Movies in iTunes have always been served up a la carte, and users have always had to take the extra step of manually transferring files between devices to enjoy them on the go. The potential deal would allow users to stream movies purchased directly to devices without having to transfer them.
Although the two services would still differ dramatically -- a la carte versus subscription -- it would represent Apple's first direct move into the Netflix-dominated realm of mobile video streaming. Airplay allows streaming, but it's all done locally within the home; this deal could allow you to access your movie library while out and about.
I wouldn't jump the gun and conclude that Apple is taking a direct shot at Netflix quite yet, though a streaming deal would show that Apple is embracing additional distribution methods, and it could be seen as laying the foundation to a future threat to Netflix. Apple had been reportedly considering a Hulu bid a few months back, and speculation of a full size Apple TV set -- not the current little black box -- has never died.
A full-blown living-room assault by Apple would have many casualties, and Netflix could be caught in the crossfire if Apple pursued some type of subscription service for content paired with a premium-quality display. As it stands, Netflix is safely distanced with its subscription model, but no one knows what Apple will do until it pounces.
Netflix's competition has been steadily heating up, with Amazon.com (Nasdaq: AMZN) continuing to beef up its streaming catalog for Amazon Prime members. DISH Network (Nasdaq: DISH) is bringing Blockbuster back from the grave. Hulu is still up for grabs, and Google (Nasdaq: GOOG) is allegedly still in the running as a potential suitor while Apple is notably absent from the rumors.
A handful of studios have just launched a service called UltraViolet, which also serves as an online digital locker with streaming capabilities. Disney (NYSE: DIS) has also been working on a similar technology of its own, called KeyChest, for quite some time.
With the competitive landscape evolving this quickly, Netflix couldn't have picked a worse time to jack up prices and throw its brand identity into a tailspin. The risks are stacking up, and I'm not sure the possible rewards can outweigh them.
More on Netflix:
- Should I Sell Netflix Today?
- Netflix: A Crisis of Confidence
- Is Netflix Walking Wounded or Walking Dead?
Don't forget to add Netflix to your Watchlist to see whether it can play solid defense.
