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I've asked this before, but what is there to keep Netflix from creating an iPhone version of their site and directing users there? This would let them cut Apple out of the equation completely, and still provide the same functionality, unless there's issues with playing videos on the iPhone that I am not aware of.

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Netflix uses drm on their players (through silverlight in a browser). HTML5 video doesn't have hooks for drm at the moment.

You can restrict access to content (by using a TTL or encrypting the video with Apple HTTP Streaming) but someone could still capture the stream. Their stream using silverlight is encrypted and offers the kind of security that makes content owners happy.

You can however use http live streaming with AES tokens to get the same kind of result with html5 (audio and video). It just remains to be seen if that is acceptable to nflix and the content providers they're beholden to.

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