Is iTunes Movie Rental Service Enough to Bring Down Blockbuster?

Is iTunes movie rental service enough to bring down Blockbuster? Tuesday stocks of Blockbuster plummeted as much as 17.0%.

Why the plunge? Chalk it up to an unexpected scare by Apple, which opened a new movie rental download service.

Let's face it, in the public arena, many people simply hate Blockbuster already. There are even websites devoted to people's extreme vitriol for the video rental giant.

Blockbuster fell into trouble because technology advanced with the times and they assumed the same stance as a stereotypical stodgy librarian groveling over late fees for far too long, even hitting the credit reports of those who did not return their movies on time by sending their late fees to collection agencies. This allowed Netflix the perfect opportunity to step in as the superheroes, the good guys, the ones who would deliver us from all late fees forever.

Years ago, Blockbuster's business model seemed to revolve around their exorbitant late fees, but they tried to change their image with a 'No late fee' policy which sounded good, but in the fine print, late fees were still in application. The return time had just extended.

After being sued for bad business practices, Blockbuster held strong and changed their policy once again, making the fine print a little more accessible. Still, stockholders had faith that Blockbuster could turn their image around by offering some of the same services as Netflix, but emphasizing the convenience of their heavy retail store presence. To say Blockbuster has nothing to worry about would be far from the truth, so could Apple throwing a hat into the movie rental ring with terms that beat theirs be the other foot in the grave for Blockbuster?

Apple has enjoyed a comeback success with ipod in past years and now ipods are a technology staple. The iphone has been one of the most hyped technological releases of 2007 and products designed for use with ipods have been high sellers, but does Apple have the capability to dominate the movie rental business?

Not quite yet.

On Wednesday, stocks began a rebound after the initial shock diminished and realization of the terms being offered by itunes were discovered. The itunes rental service, after an examination of offerings, is not even in the same ballpark of the giants, Netflix and Blockbuster. For example, here are the offerings of the three contenders as well as their weaknesses:

Blockbuster

Retail outlets all over the country offer convenience of use.

Can rent from Blockbuster last minute for get-togethers, etc. from their retail locations, though if you want discounts on those rentals or want to trade movies from their mail plan, you must upgrade to a pricier plan.

Blockbuster offers $16.99 plan with 3 in-store exchanges, but it's monthly plan for strictly movies by mail, 3 at a time, undercuts Netflix by $1 per month at $15.99. However, Netflix offers unlimited movie-watching online.

Offers 75,000 titles

Charged exorbitant late fees in the past which tainted consumer's opinion of them

Blockbuster has further alienated consumers by sending these late fee charges onto collection agencies.

NetFlix

Never any late fees

Netflix states in their user agreement that they have a more lenient policy for "lost" movies and don't typically charge the cost of the movie for rare occurrences.

Most popular plan is $16.99 for 3 dvds at a time and unlimited online movie watching.

Netflix blows Blockbuster away on the cheapest plan. At Blockbuster, you pay $8.99/per month for the cheapest one-at-a-time plan. At Netflix, you pay $4.99 and also get two hours of movie viewing online.

Offers 90,000 titles

There's a small wait time for movies to come via mail.

Netflix will be apart of LG's set-top box, which is supposed to allow consumers the ability to get any movie from NetFlix instantly on their televisions, but it's another piece of equipment consumers would have to purchase and install and many cable providers offer similar services already. Netflix may be a part of actual DVD players made by LG in the future.

ITunes

Nice if you travel a lot and watch movies on your ipod or laptop

Apple's usage is pay-per-view while Netflix is subscription-based which might encourage more viewers who watch on computer to go Apple to avoid monthly subscription costs.

Movies are $3.99 for new releases. $2.99 for library titles. You have 30 days to watch the movie.

Offers 1,000 titles

How many people honestly want to watch movies on a 2" screen?

Movies can't be watched on the TV yet and are bound to the computer, iphone, or video ipod.

Apple is thinking of offering a movie box as well, but problems are similar to those stated above with Netflix's same future offering.

What movie rental service is best for you? It depends on what type of consumer you are. Serious movie buffs, it seems, would be best off with Netflix. Netflix is also the best choice for those who like to watch movies online on a fairly constant basis. Netflix gives you the opportunity to do so legally, easily and they generously offer a wide selection for viewing.

Moderate movie users who prefer going to the store and who never watch movies on the computer may be best off with Blockbuster. Their middle plan is cheaper than Netflix and offers the option of in-store exchanges rather than Netflix's bonus of watching movies online.

Users who prefer their entertainment to be portable and on the go, want to watch movies on ipods, iphones, and their computer without the burden of subscription fees might want to choose iTunes movie rentals. Those who don't have access to watching movies on Apple products or on the computer can also look into the features offered by their local cable provider which usually offer many of the same new release titles that can be billed directly to your cable bill.

For now, it seems the only real danger in Blockbuster's league is still Netflix, though Blockbuster may still have the edge on those less tech-savvy.