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Netflix Moves To Online Movie Viewing

Streaming Video Will Be Free to Netflix Customers

January 16, 2007

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Netflix made a splash in the video rental industry by mailing DVDs to customers' homes, instead of making them traipse back and forth to a retail location.

Now the company hopes to revolutionize the industry again, introducing a new feature that allows its customers to immediately watch movies and television series on their personal computers.

Netflix said it will make the new feature available to its subscribers in a phased roll-out over the next six months.

Subscribers will continue to receive DVDs by mail from the company's catalog of over 70,000 titles and will have the additional option of instantly watching about 1,000 movies and TV series on their PCs. Netflix said the new feature will be included in subscribers' monthly membership plans at no additional cost.

"We named our company Netflix in 1998 because we believed Internet-based movie rental represented the future, first as a means of improving service and selection, and then as a means of movie delivery," said Reed Hastings, the company's CEO.

"While mainstream consumer adoption of online movie watching will take a number of years due to content and technology hurdles, the time is right for Netflix to take the first step.

"Over the coming years we'll expand our selection of films, and we'll work to get to every Internet-connected screen, from cell phones to PCs to plasma screens. The PC screen is the best Internet-connected screen today, so we are starting there. "

Netflix said the introduction of immediate viewing is part of its plan to lead movie rental in total by adding electronic delivery to its existing DVD delivery platform. Netflix is specifically focusing on the rental segment of electronic delivery, distinct from the download-to-own market and advertising-supported electronic delivery.

The new immediate viewing feature differs from current services in that it does not require the often lengthy downloading of a large video file. The Netflix feature uses real-time playback technology -- called streaming video -- that allows video to be viewed at virtually the same time it is being delivered to a user's computer.

Following a one-time installation of a simple browser applet, most subscribers' movie selections will begin playing in their Web browser in as little as 10 to 15 seconds. Movies can be paused and a position bar gives viewers the ability to immediately jump to any point in the movie.

In all, the instant-watching feature requires only Internet connectivity with a minimum of one megabit per second of bandwidth. The more bandwidth a consumer has, the higher quality the video displayed, ranging from the quality of current Netflix previews to DVD quality with a three-megabit-per-second connection.

Initially, the new feature will offer about 1,000 titles and its selection will expand over time as licensing for electronically delivered movie rentals widens. The number of titles available at introduction roughly mirrors the number of DVD titles Netflix carried when its subscription service was launched in 1999.

In seven years, that DVD catalog has grown to over 70,000. Netflix said most of the major and many independent studios are supporting the introduction of the new feature, including NBC Universal, Sony Pictures, Metro-Goldwyn-Mayer Studios, 20th Century Fox, Paramount Pictures, Warner Bros., New Line Cinema and Lionsgate.

In addition, content is being provided by A&E Television Networks, Anime Network, Allumination FilmWorks, BBC Worldwide, Cinema Libre Studios, Egami Media, Film Movement, Hart Sharp Video, The Independent Film Channel, Magnolia Pictures, New Video Group, New Yorker Films, Palm Pictures, Seventh Art , Silvernitrate Entertainment, Starz Digital, ThinkFilm, Video Action Sports, WMG Productions and Wolfe Video, among others.

Netflix said it expects to make the new feature available to all Netflix subscribers by the end of June. The hours available for instant watching will vary based on subscribers' monthly plans.

For example, subscribers on the entry-level $5.99 plan will have six hours of online movie watching per month and subscribers on Netflix's most popular plan, $17.99 for unlimited DVD rental and three discs out at a time, will have 18 hours of online movie watching per month.

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