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Summary:

The new Apple TV should hit the the 1 million sold mark later this week Apple said today. The success of the device in its second iteration is likely a result of its lower price and the inclusion of streaming partners such as Netflix.

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The new Apple TV should hit the the 1 million sold mark later this week Apple said today. The success of the device in its second iteration is likely a result of its lower price and the inclusion of streaming partners such as Netflix.

The new Apple TV’s price point at $99 definitely helped it gain traction with consumers. The version it replaced cost $229, though it did ship with a 160GB hard drive. And streaming iTunes rentals may be a draw for some, although reading between the lines of Apple’s press release, that isn’t the impression you get. Apple says that “iTunes users are now renting and purchasing over 400,000 TV episodes and over 150,000 movies per day,” but doesn’t make any specific mention of how much of that is happening directly on the Apple TV platform.

No, the real key to Apple’s success with this iteration of the Apple TV is the introduction of Netflix streaming. Some were skeptical the introduction of Netflix would have any effect on Apple TV’s sales, but those naysayers probably didn’t take into account the new, lower price point for the Apple TV. It’s true that Netflix is already available on every major console, but Apple’s price of entry is cheaper for those just looking for a way to cut the cord without the frills. The Roku XD may be cheaper, and also provides Netflix, but it doesn’t have the brand cache and market reach that Apple does.

Netflix now has presence in 23 percent of homes with broadband internet access according to Seeking Alpha, which is up 52 percent from last year, for a total of around 20 million subscribers. Goldman Sachs also predicts that its total subscriber base will continue to experience strong growth, reaching 50 million subscribers by 2015. Since it moved into the Canadian market this fall, Netflix has been able to reach a much broader audience. Apple may have a lot of things going for it in other areas, but Netflix is the beast that’s driving its living room success.

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  1. Andrew MacDonald Tuesday, December 21, 2010

    Apple are and were talking up the Netflix integration, but that means nothing to people outside of the US.

    For this exact reason, I have three of the old Apple TV units in my household and will not be buying the new lower priced device until it’s features are able to be fully utilised.

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  2. A ever Darrell you completely ignore the rest of the world. Netflix is only available in N. America, and as over 50% (53% at the last financial) of Apple’s sales come from outside the US, how does Netflix help there? Try and think outside of the parochial, please!

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  3. Considering every single Apple competitor in the space, Google TV included (and I don’t think they have a brand recognition issue over at Google) support Netflix, you need to look to factors other than Netflix to explain the Apple TV success vs., for instance, the Google TV failure.

    How about: best designed, easiest to use media extender? How about integration with iTunes, which is far and away the most popular consumer media management software and media store? This stuff really isn’t very mysterious when you consider the obvious.

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  4. I bought it because it was apple and it was only $99. I use it mostly because of Netflix.

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    1. The device is cheap. But if the computer is itself connected to TV, this device becomes obsolete.

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      1. That’s true and I know this is lazy of me, but I don’t like having to hook my computer up to my tv. I like the idea of a dedicated box for the tv. Roku or Boxee probably work just as well, but I have gone all-in on apple products the last few years and I appreciate the easy integration with my macbook, iPhone, and iPad.

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  5. One more obvious reason that AppleTV is outselling everyone else: Airplay. Any audio or video content on any iDevice in the house–iPhone, iPod touch or iPad–can be streamed to my AppleTV with one button.

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    1. Absolutely. It’s silly to say that Apple should thank Netflix, because there are plenty of devices that stream Netflix. My DVD player, Roku, and some TV sets will do it. Netflix and Pandora are showing up on all kinds of devices.

      But AirPlay… I love it. LOVE it. I had an older Apple TV and bought the new one because AirPlay made things that much easier. I already have a Roku device, so Netflix was not even a reason.

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  6. I like my AppleTV a lot, but my major complaint is that I can be watching a movie from Netflix in about 1 minute, but it takes me 5 hours to get a rented movie from iTunes…drives me crazy…

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  7. Hamranhansenhanssn Friday, December 24, 2010

    > cache

    Should be “cachet.”

    Of course Apple should thank Netflix, but the reverse is also true. Many Apple customers don’t know WTF a Roku is or a game console or any other techie way to get Netflix. That is a whole different universe from the Apple Store. I bought an iPad, downloaded the Netflix app, and then I signed up with Netflix.

    Ultimately, AirPlay will sell many more Apple TV than Netflix. The Apple TV box is only a little bit more than the cables you would otherwise use to hook an iOS device to a TV.

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  8. [...] has indeed crossed the 1 million Apple TVs sold mark, as it predicted it would shortly before Christmas. I argued that its relative success was mostly [...]

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