"Obviously in the long-term, it will all be digital," said Kevin Lewis, head of Blockbuster's digital strategy, in a recent interview  with Fast Company. "The future is streaming," echoed  Steve Swasey, Netflix's VP of corporate communications, in another interview.
For both Blockbuster and Netflix, the future needs to be digital. Blockbuster's brick-and-mortar business is costing the company serious cash, and its stores are rapidly shuttering. Blockbuster's by-mail solution, its response to Netflix's service, accounts  for just 2% of the market. Netflix boasts a 97% share.
Yet even with its success in the DVD-by-mail market, Netflix is bleeding revenue as the postal service's largest single customer, spending over $600 million annually in postage fees.
Both companies are already online: Netflix's streaming service reaches more than 60% of its subscribers, and Blockbuster On Demand is becoming a worthy competitor to Comcast. Now both companies are also on-the-go.
Today Netflix released its free app for the iPhone and iPod Touch, essentially a pocket-version of its popular iPad app. Blockbuster too has ventured into the app market, and now comes default on the Droid X. Here's how the two apps stack up.
Streaming vs. Download. Wi-Fi vs. 3G.
When a friend of mine heard about Netflix's iPhone app this morning, he became excited. "This makes my subway ride bearable!" he beamed. "Wait, will it work on the subway?"
No, it will not. Netflix is a streaming app, meaning subscribers need to be connected to the Internet in order to view films. Movies cannot be buffered, and then taken outside--an Internet connection is required.
Blockbuster's app is download-only, meaning movie files needs to be fully downloaded before watching, and cannot be streamed. Only once downloads are completed are movies viewable, without connection to the Internet.
In order to download movies on Blockbuster, you need to be connected to Wi-Fi. Movies cannot be downloaded over 3G. Moreover, these files are huge, around 500 megabytes each, and take about 10-12 minutes to download. Don't count on this service if you're racing to catch a train or bus.
Netflix's iPod Touch app can only stream over Wi-Fi, since that's all the device uses. The iPhone can stream the Netflix app over 3G. Netflix on the iPhone is by far the most mobile service among the competitors.
Of course, there are pros and cons to both services. How is Blockbuster's app at all mobile if it needs to be downloaded over Wi-Fi? And do you really want to download a 500 megabyte file each time? That's a huge chunk of the device's memory, especially if you've filled it up with music, apps, and photos. In theory, it's amazing to have Netflix's entire online library available on-the-go through the iPhone's 3G service area. But subscribers will still have to contend with a shortened battery life and AT&T's spotty service.
Rental, Subscriptions, and HDMI
How much are you willing to spend to watch a movie on a tiny smartphone screen? Blockbuster's app is all pay-per-view. Rentals are fixed at $3.99 and will last 24 hours. Purchases cost $17.99. That's a lot of money to drop on Hot Tub Time Machine. With a Netflix subscription, streaming movies come free.
And if you actually did drop $17.99 on Hot Tub Time Machine, make sure you're ready to watch it on the Droid. Forever. The app has no HDMI out, meaning once it's downloaded onto the app, it cannot be synced with a computer or a television. The only way to free up that 500 megabytes on the phone is to delete it. To put that in perspective, when you download or rent a movie from iTunes, it can be synced from the computer to the iPhone, iPod Touch, or iPad. Blockbuster's app is not capable of this. When it's downloaded onto the phone, it can only be watched on the phone.
Again, Netflix's app is streaming, and can be accessed with any Netflix-enabled device. You can start watching something on your PC or Mac, switch to the Xbox or Wii, then pick up where you left off on your iPod Touch or iPhone. It's all seamlessly synced and ready to be resumed.
Blockbuster's digital chief recently asked : "Would you rather have a streaming app on an iPad? Or would you rather have an embedded application on the Droid? That was an easy one for us." For everyone else, the choice is not so easy.
Netflix pros include 3G streaming, unlimited free movies with subscription, and synced playback. Blockbuster's only pro: the ability to download movies.
What can Blockbuster's app do that iTunes can't? iPhone and iPod Touch users can now watch Netflix streaming. If they want to download a movie, iTunes is just a click away, offering comparable prices for rentals and purchases, and the ability to sync to a slew of devices.
On the Droid, movie viewing is limited to downloading big files, at a big cost, without the ability of syncing these movies to other devices. Droid users had better hope Netflix's rumored app comes sooner rather than later.
What do you think? Have you had a chance to check out Netflix's app on the iPhone and iPod Touch? Are there any Droid users out there that has used Blockbuster's app? Which company is leading in the mobile space?