Netflix Deal Reveals Apple's Secret Sauce: iTunes Pay ChannelBY Kit Eaton |
Apple TV brings a new UI, better internal specs, and full HD capability to the table. But there's the business equivalent of an Easter egg hidden in it for Netflix subscribers: From now on, if you want to join Netflix you can do it through your Apple TV, and Apple handles the payments via its iTunes back channel. Essentially it works like this: The Apple TV functionality hinges on your iTunes user account, the same kind that's powered 25 billion app downloads to date. You give Apple your credit card details then click "okay, charge it" when you buy an app, rent a movie, or download a song from iTunes. Now Apple's made joining Netflix just as frictionless through Apple TV, eliminating the need to retype your credit card info into the Netflix app. You just allow Apple to charge your iTunes account. It works from a consumer point of view because it's easy, and because we're all getting used to trusting Apple as a pay channel for our apps and content--handing over $1.99 for an app, trusting Apple's device-to-device security and so on is now normal. It works for Netflix because it makes it easier for users to sign up to their paid service, which is likely to bump up the numbers. It also works from Apple's point of view, because they no doubt get a little financial action from Netflix on the deal (though probably not the traditional App Store 30% cut--we've queried them on this) and certainly they can use the information to improve their customer analytics. But the iTunes customer database is now composed of hundreds upon hundreds of millions of users, with a secure verification system and credit card number attached to each account. Apple's even pushing its Mac userbase toward signing up to an Apple account, even if you're not an iTunes subcriber, with the Mac app store, meaning there are millions more customers handing over their data to Apple. And it's at this point you need to remember Apple's EasyPay system, on trial in U.S. stores. It's a clever "future shopping" play, whereby you can actually order and pay for physical goods in Apple stores through the Store app on, say, your iPhone. And for certain goods you can actually pick them off the shelves, scan the code, pay for it through the app and leave the store without speaking to a sales assistant. It's simple, convenient, enabled by Apple's iTunes/Mac account database, has built-in security courtesy of your phone's own security layers and its known location at the time of the transaction, it all happens over Wi-Fi, and there's no NFC or Bluetooth gizmos involved. And it sounds a whole lot like the mobile payments-based future shopping revolution we've written about. Now Apple's expanding this influence to let you pay for Netflix too. What Apple is quietly doing is changing how you pay for things online, and the more speculative reader may wonder if this is a bigger step toward a long-rumored mobile payment system from Apple. As we've noted, and several recent moves by different players in this game from credit card companies and PayPal have confirmed, the mobile pay space is evolving so quickly that there's something of a land-grab going on, each firm trying to ensure its position in the upcoming mobile payment space. Apple's iTunes trick for EasyPay and now Netflix neatly side-steps all of this mess. As far as Apple's concerned it has your credit card details, it can verify who you are for security reasons, it has its own software running on its own hardware and it has its own solutions to user problems. As it's demonstrated with iMessage, responsible for worrying the phone networks so much, Apple's quite happy to go its own way with things--meaning it could easily come up with its own mobile pay solution, an expansion of EasyPay that lets you pay for groceries in the supermarket, or tickets in a movie theater just as easily as a pair of headphones in the Apple Store. It's speculation, but it's not that big a step.
Review: 'Lilyhammer' Is Light But
Worth A Lookhe Netflix streaming library just got a new TV series that you almost certainly have never seen before. "Lilyhammer," a new series starring former "Sopranos" star Steven Van Zandt, is the first show to be released exclusively in America by Netflix as part one of the company's push to become a creator of premium content. The fish-out-of-water dramedy made its official U.S. debut Monday, with all eight episodes of the first season available online for immediate viewing.
Netflix's Chief Content Officer Ted Sarandos announced the launch of "Lillyhammer" on the Netflix blog, trumpeting it as "the first of many brand new, original and exclusive series to debut on Netflix."
"This show is different in many ways," Sarandos wrote. "First of all, this is surely the most ambitious original show to premiere online in history. The presence of an American star like Van Zandt and the production quality and the length of the episodes position 'Lilyhammer' in the class of programing usually only found on premium pay television."
The darkly comedic "Lillyhammer" is centered on a New York mobster (played by Van Zandt) who enters the Witness Protection Program and is sent to Lillehammer, Norway. Hijinks ensue.
The show is immediately available for American, Canadian and Latin American Netflix streaming customers, and has been airing in Norway for the past five weeks. Sarandos boasted in his blog post that "Lilyhammer" is already the most watched show in Norwegian television history.
England's BBC network announced on Feb. 5 that it had reached a deal with Netflix to bring "Lillyhammer" to British televisions, too.
On this side of the pond, however, the show will initially be available only online and on Netflix. The DVD and streaming company owns the rights to "Lillyhammer" in the Americas for "multiple years," Netflix spokesman Steve Swasey told HuffPost. When Netflix's contract with the production company behind "Lillyhammer" lapses, the show could find its way onto an American TV station -- for now, though, only Netflix streaming subscribers will be able to watch the show in the United States, Canada and Latin America.
Although Netflix will be watching to see how "Lillyhammer" performs, Swasey emphasized that the company is not necessarily depending on original and exclusive content for its future, and that it will continue to devote much of its budget to popular shows from the networks and big movies from the studios.
"[Original programming at Netflix] is something between a test or an experiment and a full-fledged initiative," Swasey said. "We're not putting all the wood behind the arrow and we're not just dabbling in it either...It's something we're working on, but the major portion of our budget is still going to be our TV shows and movies."
That original content may become more important as TV shows and movies become more expensive. Many of the key streaming contracts that Netflix had signed with the major movie studios will expire in 2012 and 2013, and with content costs expected to soar during contract negotiations with those studios this year, Netflix CEO Reed Hastings has said that creating original, must-see content is at least part of the company's strategy for future success. To that end, Netflix has commissioned several high-profile new shows, including a new season of canceled cult classic "Arrested Development," as well as the premiere run of the David Fincher-Kevin Spacey series "House Of Cards" in a reported nine-figure deal. Netflix outbid HBO and Showtime for the rights to the latter show.
Though "Arrested Development" and "House of Cards" will soon follow, the mobster dramedy "Lillyhammer" is first out of the chute. Netflix streaming subscribers in the U.S., Canada and Latin America can watch it here.