In the beginning there was the brick and mortar movie rental store, you’d get in your car, drive to the store, pick out a movie, pay for it, drive back to your house, and repeat the process.

Then about 10 years ago a new way of renting movies burst onto the scene. The company was Netflix and it allowed you to rent a much wider selection of DVDs than your average brick and mortar store and take out as many DVDs as you wanted(with certain plans) with a limit of a certain many at a time and returnable my mail(instead of in the store) all for a monthly fee.

This idea was wildly popular, with Netflix garnering millions of subscribers in the first few years of its operations.

Not to be outdone one of the largest brick and mortar stores, Blockbuster eventually launched their own service similar to Netflix, Blockbuster Online, with a fairly similar price point and movie selection. Their secret weapon against Netflix? The ability to trade a limited amount of movies per month to the store instead of by mail. Netflix’s response in the war was a couple of years later to begin offering internet streaming of a limited selection of its content.

During this same timeframe, Walmart also launched a DVD rental service, and pulled out handing its operation to Netflix. Earlier this year, Walmart sort of reentered the market by launching an online movie rental service.

Thats how things stood for almost a year, with Netflix, Blockbuster Online, other smaller DVD mailing service, brick and mortar stores, and online rental service(such as Walmart, Amazon though their Unbox service, and Microsoft to owners of Xbox 360s) all vying for a larger slice of the lucrative DVD rental business.

But things have really heated up in the last few days, Walmart has discontinued its online movie rental service and Apple announced at nearly the same time that it has partnered with 20th Century Fox to offer movie rentals though its popular iTunes store(deals with out major studios appear in the works as well).

While it is true that Amazon and Walmart have been offering downloads to PCs for quite some time, and simlar is true for Xbox 360 users. Forbes has suggested that the iPod may very well kill Blockbuster(and also Netflix).

The ultimate problem with this argument is that while iPods are great for a purely audio media such as music, their small screens make them non-ideal for movies, the same can also be said for most laptops. Amazon’s and Walmart’s rental services haven’t seemed to get much traction(leading Walmart to back out, although that may have been for other reasons). While it is true that Apple has a ton of devices that could potentially be used as portable DVD players, it simply does not reflect the way that most people watch DVDs. Xbox 360’s service does seem more in line with the needs of consumers, since the Xbox is almost invariably tied to a large TV screen, but it still doesn’t offer the portability that physical DVDs do.

Netflix, however, not to be outdone on this front by this perceived threat by Apple, however, announced late last night that it will begin delivering streaming movies and other programming through a set-top box, the AP story has this to say,

Although Netflix says its subscribers have watched more than 10 million movies and TV episodes through its “Watch Instantly” option so far, the streaming service has been too constraining for many subscribers. That’s because all the streaming service’s programming must be watched on a personal computer, unless the viewer knows how to link a high-speed Internet connection into a TV monitor.

Therefore the real problem for Netflix and Blockbuster is not the iPod but that of Apple TV, a device that allows for syncing of the iTunes library to a TV.

This, however, is an incrediably savvy move by Netflix to up the ante in this video rental war. It may very well still be won by Apple with its Apple TV and movie rental downloads, but there is something to be said for a monthly fee versus a per movie rate, that Apple(and Amazon for that matter) will have to consider if it wants to ultimately win the war.

Popularity: 19% [?]