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What is this, the Reality Distortion Field (RDF) at it’s best? TUAW’s claiming that news of movie rentals via iTunes is making Blockbuster and Netflix stock drop, despite the fact that movie rentals on iTunes is nothing but novelty. Don’t get me wrong - the fact that I have a new rental option is nice, especially since I can do it without leaving my home. The price of this luxury is not cheap, however: four dollars for basic movies, and five dollars for HD movies.

Meanwhile, I can get unlimited HD movies sent via the mail, per month, thanks to Netflix, for less than the cost of two HD movies via the iTunes rental service. Plus, I’m not forced to watch my Netflix movies within 24 hours of starting them. In other words, the iTunes rental service looks great on paper if money is no option, but for a rental budget of $10 per month, Netflix is still the much better deal. Not to mention, Netflix allows me to stream movies from the Internet in addition to the movies I get via mail, which means the limitation on me having only one movie out at a time is moot, especially since Netflix announced that I can have unlimited movie streaming.

As nice as the iTunes movie rental business is, it’s too frikken pricey. What Apple should have done is find a way to negotiate unlimited rentals for a monthly subscription cost, perhaps by placing certain limitations on the service such as forcing users to delete/finish one movie before they can download another. Instead, Apple is charging a fee for movies at a higher cost than brick’n mortar competitors, and certainly more expensive than Netflix. That’s not a way to corner the market, and the undue hype around this movie rental announcement is plain silly.

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