Netflix Releases Online Movie Streaming Service
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Written By Kate Zimmermann | January 16, 2007 | Share This
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Today Netflix announced a new program called Watch Now that will allow subscribers to stream movies immediately through the Netflix website. Hacking Netflix.com has a pretty cool demo of the service. Though video quality isn’t as great as say, an iTunes download, customers can watch an unlimited number of movies at any time. Users get 18 hours free as a part of their monthly subscription, and 1 hour for every $1 extra. The movies play within a downloadable Netflix Movie Player that will judge the strength of your internet connection and vary the video quality accordingly. At the moment, there are only 1000 videos available, though Netflix plans to expand the selection to at least 5000 by the end of the year.
Though it sounds cool initially, the Watch Now program has a number of drawbacks. To begin with, the videos are streamed, not downloaded - this gives it a competitive disadvantage against download-to-own services like Movielink.com, Amazon’s Unbox, or the iTunes store. Netflix seems to regard this as their point of differentiation, stating in the press release, “Netflix is specifically focusing on the rental segment of electronic delivery, distinct from the download-to-own market and advertising-supported electronic delivery.” Granted, Netflix has a better price point than competing alternatives, and more flexibility to switch between movies, but its internet dependability detracts from the portability of the service.
Second, Netflix currently only works with Windows, IE7, and certain models of Microsoft’s antipiracy software. That automatically alienates the enormous techie contingent (aka, the early adopters) that operate with Mac and Firefox, and the even larger tech-illiterate contingent that won’t bother to spend 15 minutes on the phone resolving DRM issues. It’s no wonder that Netflix’s CEO Reed Hastings admits that they’re catering to a “microscopic” market.
Finally, as the NY Times writes, consumer adoption is further challenged by lagging internet technologies and archaic commercial attitudes towards content distribution. “On the technological front, it is still difficult to deliver various Internet video formats to a TV screen. And on the commercial front, movie studios are leery of piracy and, more important, are fearful of cannibalizing their existing distribution businesses.”
Nevertheless, the market is still young, and rich media applications are setting new industry standards. What’s more, as consumer adoption increases, Netflix’s price point will likely decrease - Hastings reports, “Online is more cost effective so we’re learning how close to our current gross margin model can we operate as consumers watch more movies online.” Considering the $40 million overhead that Netflix paid to develop their streaming technology, they clearly expect this market to grow.
Topics: Technology |
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