To make it easier to watch movies on the AppleTV, Apple today announced a new software update for the devices which will add support for the new iTunes Movie Rental store.

In addition, pricing on the AppleTV has been lowered, with systems set to be released in two weeks with the new software available for $229 (40GB) and $329 (160GB).

The Apple TV set-top box was originally intended to make it easier for anyone to transfer media files from their PC to their television.

This is an idea that seems to have been wholly accepted by consumers, although some users still experience problems due to the interface.

Current owners of an Apple TV need not worry about purchasing new hardware, as the company has mentioned that it will provide the new software free of charge to existing owners. 

Steve Jobs Explains The Strategy

Steve Jobs, Apple’s CEO said:

“With the new Apple TV and iTunes Movie Rentals, movie lovers can rent DVD-quality or stunning HD movies from their couch with just a click of a button.”

“No more driving to the video store or waiting for DVDs to arrive in the mail.” 

Should Netflix be worried or does Apple stand a change against the internet movie rental king that ended Blockbuster’s reign on the market?

Although iTunes has proved very successful in the sales of video and music, its new rental division may have more trouble becoming as popular.

Not only because Apple has sold millions more iPods than Apple TV devices, but also due to the static pricing rates Apple is set to implement for the new service. 

Pricing Issues?

DVD-quality movie rental on iTunes will reportedly sell at $2.99 for library titles and $3.99 for new releases, while the high-definition versions will be priced slightly higher at $3.99 for library titles and new releases at $4.99.

According to the press release:

“Customers have up to 30 days to start watching it, and once a movie has been started customers have 24 hours to finish it — or watch it multiple times.”

In Comparison To Netflix

This pricing strategy is reminiscent of the overpriced fees that Blockbuster charges per rental, when, nowadays, I am much more fond of the monthly rates introduced by Netflix, and now mimicked by Blockbuster’s online service. 

With the new iTunes service you could get 4 new releases for $16, whereas for a monthly fee of $16.99, Netflix offers not only unlimited rentals for the month, but also an unlimited viewing period. 

Even though the new iTunes rental services benefits from completely digital download and no need for DVDs, Netflix’s plan also includes access to more than 90,000 titles that are viewable on an PC (or TV through the use a simple, inexpensive cable which is my method).

As far as how big Apple’s rental library will be, expect at least 1,000 titles (100 of those in HD) from all major studios by the end of February. From there it will continue to grow of course, with new releases expected to be available via the service within 30 days of their release on DVD.

Conclusions

The way I see it, Apple may have the “convenience” factor, but Netflix has the “value” factor and will also have new titles earlier than iTunes Movie Rentals. 

It will just depend which is more important to each specific consumer. Given time though, its anyone’s guess where iTunes rentals will be in a year. Apple should at least consider a monthly pricing scheme though, right?

Michael Garrett is a contributing author discussing the social networking world, his work can be found on Profy.com

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