Who's Winning the Streaming War?

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It began with an episode of Gilmore Girls.

A friend made an obscure reference to the show one evening, and set about trying to locate an episode on the Internet. The show wasn't included in Amazon (NAS: AMZN) Prime, the company's shipping and streaming club, of which she's a member. So she tried to buy it. When she ran into difficulties, I turned to Apple (NAS: AAPL) iTunes and also attempted to download the show.

What resulted was a tortoise and the hare race to the finish. Who won says a lot about the future of streaming.

Something for nothing?
Gilmore Girls ran from 2000-2007 and landed places on Entertainment Weekly's "New TV Classics" list and TIME magazine's "100 Best TV Shows of All Time." In other words, not an obscure show, and not predigital. I expected locating it to be fairly easy.

As my friend logged into her computer and I into mine, I thought, "Surely this is free somewhere." After all, most of the major players announced new content deals this weekend, including Hulu, owned by Comcast's (NAS: CMCSA) NBC, News Corp.'s (NAS: NWS) Fox channel, Walt Disney's (NYS: DIS) ABC, a private equity firm, and the Hulu team, which announced a new deal with the CW channel; Google's (NAS: GOOG) Youtube, which has secured content deals for exclusive celebrity and branded content; and Netflix, which announced it had renewed its current deal for ABC, ABC Family, and the Disney Channel. Amazon also announced a licensing agreement for ABC, ABC Family, and the Disney Channel, as well as Marvel comics.

But neither Hulu nor Youtube carries the show, nor did my friend's paid subscription to Amazon Prime. We ruled out Netflix (NAS: NFLX) immediately. I canceled my membership recently, but even if I hadn't, it wouldn't have mattered. The Red Envelope doesn't offer Gilmore Girls via streaming. (Foolish colleague Robert Eberhard says the lack of streaming Gilmore Girls is why he canceled his Netflix account, but I suspect he was kidding.)

Had we thought of it earlier, we could have checked the DVDs out for free from my local library, which carries the entire series. But it was too late. That left paying. This is how it went down.

One at a time or all at once
On Amazon, my friend had the option to either purchase the episode for $1.99 or the season for $15.99. As an indicator of the obsolescence of DVDs, she also had the option of purchasing the box set of the season new for $24.99 or used for $18.99. At iTunes, my purchase cost $2.99 but downloaded both the HD and regular versions.

Content (availability) is king
Most streaming options fall into three categories: watch for free, watch as part of a monthly or annual subscription (such as Hulu Plus and Amazon Prime), or purchase. But the future may be in an untapped market: rentals.

Until this past August, iTunes offered customers the option of renting television shows. I rented Monty Python and the Quest for the Holy Grail a few years ago, and was quite pleased with the process. But claiming customers would rather own than rent, Apple nixed the option. Youtube is trying out movie rentals in beta, and may be the sleeper winner of the streaming wars. Had the episode we wanted been available on Youtube, we would have bought a 24-hour pass, no questions asked.

Rent or own
The decline of Netflix this summer taught us two things. First, that strong corporate communications is key. Second, that the streaming industry is changing, and no one knows for sure what it's going to look like. For a streaming plan to be fully successful, it needs to be fluid and offer instant gratification. Our troubles with iTunes and Amazon would have led us to another platform, had there been one which offered the show for free, or as a rental. Neither of us would have bought another monthly subscription for one show. It was a whim we wanted to indulge, not one we wanted to be committed to forever.

And the winner is...
So who won the race to download? My friend. She was able to download the entire season from Amazon while my single episode was still downloading from iTunes. And I'm stuck with an episode of Gilmore Girls which I will probably never watch again. Ultimately, Amazon was simply easier, faster, and less expensive than iTunes.

There's got to be a better way. Here at the Fool, we've taken a hard look at the future of video on demand, and what it means for global communications. In fact, we've deemed one company working in the streaming field as The Motley Fool's Top Stock for 2011. Want to know which one? Check out this special report. Download a copy on us; it's free for Fools.

Create a race of your own by adding these companies to My Watchlist.

At the time this article was published Fool contributor Molly McCluskey doesn't own shares of any of the companies mentioned. You can follow her on Twitter at @MollyEMcCluskey. The Motley Fool owns shares of Apple and Google.Motley Fool newsletter serviceshave recommended buying shares of Netflix, Google, Apple, Walt Disney, and Amazon.com.Motley Fool newsletter serviceshave recommended creating a bull call spread position in Apple. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

Copyright © 1995 - 2011 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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