iTunes Rentals Growing Fast; Now 1/10 of Netflix

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Apple recently announced that it is on the brink of selling its one millionth Apple TV and that iTunes users are buying and renting over 400,000 television episodes and 150,000 movies each day. Barron’s reports that this disclosure led Gleacher & Company analyst Brian Marshall to dig a little deeper and compare iTunes’ likely share of the TV and movie rentals market versus that of Netflix.

Marshall estimated that 90% of the television episodes and 75% of the movies acquired by iTunes subscribers are rentals, though exactly how he arrived at that assumption is unclear. Regardless, if those numbers are correct, Apple is grossing $60 million per quarter from iTunes rentals.

While iTunes’ numbers seem large, they are still no match for Netflix, which has 16.9 million subscribers and streams around 2.5 million rentals each day. However, given that iTunes launched in 2005 and is thus only half the age of Netflix, which debuted in 1999, already doing one tenth as much business as Netflix is nothing to sneeze at and Marshall estimates that since Netflix expanded from 3.6 million subscribers in 2005 to its current 16.9 million, Apple should be able to have similar growth and hit $1 billion annual rental revenue by 2015.

Stock watchers should note that Marshall maintains his buy rating for Apple (APPL, currently selling at $325.58) with a price target of $355.