In a move to help it break free of the old-school DVD format, Netflix is beefing up its streaming video service. Instead of limiting the number of hours customers can watch movies online, Netflix is now offering unlimited video streaming from its entire video library.
With the change, customers can catch up on their favorite TV shows with marathon streaming sessions of hits like “Heroes” and “The Office.” Not all television shows are available; however, Netflix’s latest move points to its new strategy to diversify its offerings.
“The word on the street is that Netflix’s streaming business has been much more successful than it and its content partners hoped,” James McQuivey, a analyst and vice president of research for Forrester, told the E-Commerce Times.
“[It’s] no surprise, then, that Netflix would seize the momentum and try to expand the business while it’s hot. Meanwhile, online DVD rental is still growing and the DVD will be the dominant movie delivery mechanism for a few more years at least, so there’s no reason not to maintain both businesses — deriving revenue from one and growth potential from the other,” he explained.
“Eventually, online delivery will be a powerful mechanism for movies, competing with VOD (video on-demand) and eventually the DVD, though that’s a few years away,” he added.
The Younger Customer
“There’s been a great amount of satisfaction with the feature, but it’s still a DVD world,” Steve Swasey, vice president of corporate communications for Netflix, told the E-Commerce Times.
“We have 90,000 titles on DVD and more than 6,000 choices for watching instantly on the PC — movies and TV shows,” he added. “Since it’s on the PC, it’s mostly the under-30 crowd who like the feature, but those who like it really love it.”
Netflix hasn’t released the latest statistics surrounding its streaming service, which it launched early last year. In the first six months, the streaming service delivered 5 million movies and TV shows to customers. Then, six weeks later — Aug. 22 — the number of views had doubled to 10 million.
There hasn’t been widespread reports of customers running into problems with the download service by butting up against their monthly limits. For example, an unlimited DVD rental plan that lets customers have three DVDs checked out at any one time costs US$16.99 and previously came with 17 hours of streaming content — about eight movies’ worth of time.
“We went to the unlimited [model] because it’s consistent with our service,” Swasey said. “You can rent unlimited DVDs in eight of the nine price plans that we have, so it’s more in keeping with our unlimited rental model.”
The only pricing model that doesn’t offer unlimited streaming is the lowest level of DVD rentals, two per month, at $4.99. It only comes with two hours of streaming content.
Biting Into Apple?
What about Apple, Macworld and the prediction that Steve Jobs will announce an iTunes-based rental service? Might Netflix be trying to jump the competitive gun?
“We’ve been planning this a long time,” Swasey said. “We have our own strategy and we do our own service for Netflix — companies put things in motion many months before they know what competitors are doing. We planned this a long time before the Apple rumors came out.”
Netfilx and the Mac User
Speaking of Apple, the streaming service only works on PCs — not Macs running OS X. Mac lovers have so far been shut out of Netflix’s streaming party.
“Netflix’s goal is to get movies to you on any screen you want to watch them on, whether it’s a laptop, your widescreen, a Mac, a cell phone or whatever. Right now, it’s a digital rights management issue with Apple. But we’re working on that,” Swasey said.
“Last year, we announced that we were collaborating with the folks at Microsoft on their Silverlight platform, which would get us to the Mac,” he explained.
“And of course, last week we announced that we’ll be partnering with other companies, starting with LG Electronics, to get a box that you can stream right to your TV, so you can bypass the PC altogether. So we’ve got a lot of things in the works to get content to whatever screen you want to watch it on,” he added.