Internet, Movie Rental | featured news

YouTube and Paramount Pictures have reached a deal to make nearly 500 films available to rent online, even while their parent companies continue to feud over a $1 billion lawsuit.

Phone company Verizon Communications Inc. will challenge Netflix and start a video streaming service this year with Redbox and its DVD rental kiosks.

Netflix’s stock rose by about 10% last week before falling lower, driven by rumors about potential acquisition by Verizon. While reports indicated that Verizon may be seriously considering the acquisition at around $4.6 billion, the company denied that it has organized any talks or meetings with Netflix. We think that Netflix will not sell itself at the implied price per share that results from $4.6 billion bid. For details see Verizon Would Have a Tough Time Acquiring Netflix which talks about why an acquisition at stated value is unlikely, be it by Verizon or another potential suitor Amazon. In general, several analysts including Trefis analysts see any acquisition as highly unlikely.

Netflix is abandoning its widely panned decision to separate its DVD-by-mail and Internet streaming services because it would make them more difficult to use.

Netflix on Monday officially declared its future is the Internet, saying the DVD market has “peaked.” But experts wonder if the online streaming giant — now with 25 million subscribers in the second quarter — and other Web firms face a looming threat to their businesses. They aren’t talking about competitors such as Hulu, HBO Go and Amazon Prime — the threats outlined by Netflix said in its earnings report. Experts are pointing to broadband data caps.

Netflix cannot afford to reduce the number of titles it acquires due to the competitive environment.

Consumer-friendly devices like Apple TV and Web-enabled TVs make it easier to access digital versions of films, but most consumers prefer just to rent them. Studios are working to change those habits. Consumers long ago switched their shopping habits to the Internet, so that now most don't hesitate to buy cameras, TVs, books, appliances, cars, clothing, even foreclosed homes online.

YouTube's movie rental service is still in its infancy, and it still only offers a small selection of films, but that could change quickly. YouTube exec Hunter Walk told MediaPost that the site will soon offer its users the ability to charge rental fees for their uploaded videos.

YouTube, which is already trying out the movie rental business, wants to get into TV too

A contest with a $1 million prize for improving on Netflix’s movie recommendations ended in a dead heat, but has already produced an impressive legacy.