Editorial: Apple is gearing up to announce its latest device, the Apple TV (or iTV as it may or may not be called) and, according to the latest rumors, will be offering TV show rentals at $0.99 a pop. Since the device will be running some variation of the iOS4 operating system, the ability to run iOS apps will be a massive draw for consumers who want a versatile set top box option. However, Apple will need to carefully structure its subscription plans and costings in order to compete with other available services.
The app which I expect to make the biggest impact on users will not be the iTunes/online media app (whatever it is eventually called), but the Netflix app. The annual subscription feature of Netflix is exactly what is going to make it the most competitive media streaming service available on Apple TV. If Apple is intending to offer TV show rentals at a dollar a time, then the costs would very rapidly mount up for those of us who would want to watch multiple episodes of a series. For example, an average TV series can run to over 20 episodes which would equate to over $20 per season. This is almost a quarter of the cost of the Netflix annual subscription. Apple would have to offer to drop that price to $10 per season, and even then you can still only rent 10 seasons per year for the equivalent cost.
Apple needs to consider a subscription service at a reasonable rate if they are going to realistically compete. With the rumored Netflix app expected to be announced at launch, it is clear that Apple and Netflix have obviously thrashed out a deal which will allow both companies to successfully draw profit from their relative consumer streams. Offering competing services would not endear Netflix to Apple and, therefore, the Netflix app could possibly be the backbone behind the Apple TV launch. It cannot be a simple case of TV shows versus movies, iTunes versus Netflix, one-off payment versus subscription. It has to be something more.