Netflix streams movies with Watch Now service
UPDATE: Will offer movies, TV shows from all major studios except Disney
By Jennifer Netherby -- Video Business, 1/17/2007
JAN. 17 | In a new twist on the movie download business model, Netflix will allow subscribers to stream full-length movies and TV shows from nearly every major studio for viewing on a computer as the online rental retailer moves into the download space, the company announced Tuesday.
Netflix debuted the service today to a random sampling of its subscribers and plans to incrementally roll out the service to all subscribers by the end of June.
Initially, movies available under the new Watch Now feature will include mostly library films, such as The Bridge Over River Kwai, The Breakfast Club and Chinatown. The retailer will offer about 1,000 catalog movies and TV shows from NBC Universal, Sony Pictures, MGM, 20th Century Fox, Paramount Pictures, Warner Bros. and Lionsgate. The only major studio not offering movies through the service is Disney, though Netflix said it is in talks with the studio.
Netflix also will offer movies and TV shows from smaller suppliers, including A&E Television Networks, Anime Network, BBC Worldwide, Hart Sharp Video, Palm Pictures, Magnolia Pictures and Cinema Libre.
Some new release movies from Netflix’s Red Envelope division might be streamed online when they become available on DVD.
Subscribers will be allotted a number of free viewing hours each month based on their subscription plan. Subscribers on the $5.99 a month plan will get six hours of streaming a month, while subscribers on the $17.99 a month plan will get 18 hours.
Netflix focused its online movie delivery strategy on instant playback of films and making it free to view and sample movies, chief product officer Neil Hunt said.
“What we’re trying to set up here is a model that’s familiar to consumers,” Hunt said. “Consumers are used to channel surfing. This is title surfing. There are 1,000 titles out there. We believe people feel empowered to click the play button and watch a movie. If it grabs them, they’ll stay with it; if it doesn’t grab them, they’ll click on next.”
In a statement, Netflix CEO Reed Hastings called the company’s entrance into Internet-delivered movies a “first step."
Netflix has said it plans to be a leader in the movie download business but has kept quiet on its plans beyond that. The company said it is focusing on the rental segment of the download business rather than download-to-own.
When asked if the company is considering other online movie options, Hunt said right now, Netflix is targeting instant delivery of movies. Last year, a Netflix executive said the company was working on a set-top box to deliver films, and a year earlier, the company said it was in talks with TiVo on a possible partnership.
As movies will be streamed on the new service, users will be able to view the content immediately rather than have to wait to download a large file.
“The idea is to have a movie play faster than if you put a disc in a DVD player and pushed play,” Hunt said. “A 10-second start up time is what we’re shooting for.”
Subscribers must download a browser application to view movies and TV shows, and the program also will allow them to pause and skip around the content.
Users can watch films by clicking on the Watch Now tab on the retailer’s home page. They also will be able to search for movies to view and will get personal recommendations based on their movie preferences.
Netflix plans to expand its film selection in the coming years and to eventually allow movie viewing on mobile phones and TVs in addition to the computer.
The retailer also plans to stick with a hybrid plan that allows subscribers to both stream movies and receive DVDs by mail, Hunt said. Although the retailer isn’t charging for online viewing, he said the company expects some subscribers to shift to viewing some films online, which will save money in DVD shipping costs.
“Most people are not constrained by physical product but by the hours available for viewing,” he said. “In general, we expect to see shifts in behavior from one model to another.”
Sony Pictures Entertainment executive VP of digital services and distribution Sean Carey said the studio believes there is a different audience interested in buying downloadable movies versus watching them on a streaming basis. He said Netflix could have a lead in downloads given its built-in audience.
“They certainly have a loyal subscriber base; they certainly have a brand that means something in this space,” Carey said. “Both of those attributes do give them a leg up a bit compared to other [companies] virtually starting from scratch.”
Carey declined to disclose details on Sony’s deal with Netflix.
Netflix is one of many DVD retailers expected to enter the movie download space.
Blockbuster spokesman Randy Hargrove said the company plans to begin offering downloads this year.
"While we don't see digital downloading becoming a huge business in the next year or two, the company's view is that we need to be in the business," he said. Last year, Amazon.com launched its Unbox service, where it sells movie and TV show downloads. The retailer has recently begun to offer free downloads with DVD purchases to promote the service. In November, Wal-Mart offered a download add-on to customers who bought Warner Home Video's Superman Returns in stores, but the mass merchant has yet to offer any other downloads or disclose further plans.Best Buy also is reportedly working on a download offering.
