Los Gatos (CA) – Netflix today announced that it is adding a video download service and enable its customers to not only order DVDs online, but also watch movies and television series on their PC. The new service is offered at no additional cost, but there is a limited viewing time that depends on a viewer’s subscription plan.
Netflix said that it is providing access to about 1000 titles initially, which is comparable to the firm’s initial DVD portfolio back in 1999, to a limited number of its customers now and its entire base by June of this year. Videos can be viewed directly in the browser window and require the installation of an applet that, according to the company, will enable the launch of a videostream within 10 – 15 seconds. The quality of the video depends on the bandwidth available: Minimum requirement is a 1 Mb/s connection, while 3 Mb/s will deliver “DVD quality,” according to a Netflix press release.
What makes this service particularly interesting in today’s online video market is its pricing model. Netflix apparently already convinced NBC Universal, Sony Pictures, Metro-Goldwyn-Mayer, 20th Century Fox, Paramount Pictures, Warner Bros., New Line Cinema and Lionsgate to participate in the program, which is offered free of charge to Netflix subscribers. However, there isn’t an all-you-can-eat model for watching videos online, at least according to Netflix’ press release – and higher subscription fees translate into greater access to online movies. The $5.99/month plan will buy six hours of online videos per month, the $17.99/month plan buys 18 hours.
The Netflix model is different to traditional download-to-own online video services, but it does not take much to forecast that the aggressive pricing of the service could increase the heat not only on rival Blockbuster, but also on online services such as CinemaNow and Movielink. For example, Movielink, which offers download-to-own movies with heavy DRM protection, currently has about 1200 movies available for rental – for prices between $2 and $5 each. Interestingly, Movielink is a joint venture between Metro-Goldwyn-Mayer Studios, Paramount Pictures, Sony Pictures Entertainment, Universal Studios and Warner Bros. Studios – all of which have agreed to provide content licenses for Netflix’ new online service.
Netflix said that will not limit its online service to PCs. “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,” said Reed Hastings, the company’s chief executive officer, in a prepared statement.