The death of DVD rentals edged closer to the grave yesterday when Time Warner (TWX: sentiment, chart, options) announced that it will begin releasing movies to digital video-on-demand the same day as their DVD rental release. Silicon Alley Insider provided the skinny on the situation, noting that the announcement was "More bad news for Blockbuster (BBI), Netflix (NFLX), Blu-ray (SNE), and anyone else connected to the DVD rental business." The revelation accompanied TWX's earnings report yesterday, and has helped boost the stock more than 4% higher in today's trading. The stock is now poised to close its first week above its 10-week and 20-week moving averages since June 2007.

Time Warner shares aside, the move has to be a boon to Apple (AAPL: sentiment, chart, options) , which is now offering movies the same day as their DVD release. AAPL is in the process of rallying from a cup-and-handle formation, and is poised to overtake the 180 level in short order. A breakout above this region could provide a floor for the stock, which struggled earlier this year.

On the other hand, Blockbuster (BBI) and Netflix (NFLX: sentiment, chart, options) are down sharply on the news. BBI is suffering from a poor quarterly earnings performance, and NFLX continues to be plagued by lower-than-expected subscriber growth. However, I have to believe that NFLX is better positioned for the transition to on-demand video, given that the company has already rolled out its own video-download service. That's not to say that a decline in DVD rentals won't impact the company's bottom line; but, unlike BBI, NFLX already has a mechanism in place to take advantage of the switch to on-demand video. If only NFLX had some sort of deal, such as the one Tivo (TIVO) has with Amazon.com's (AMZN) Unbox service, so that subscribers could watch those movies on their TVs instead of the computer screen.

On a final note, a quote from the SAI article struck me as quite funny (unless you are a Sony or Toshiba share holder): "...it means that Sony and Toshiba just incinerated a pile of money in a useless DVD format war."