For instance, I am signed up for their $17.99 service and will get 18 hours of free movie downloads per month. Some users with more expensive plans will get up to 48 hours free. What are the limitations? The service will only work on computers running Windows XP or Vista software. That means the movies can't be watched on cell phones, TVs or video iPods, let alone computers that run on Apple's operating system.
Also only about 1,000 choices will be available initially, even though Netflix has over 70,000 DVD titles in stock. Like most movie download sites, many of those will be so-called B movies, mostly not worth watching. But there will be some classy titles available right away such as "Network," "Amadeus," "Chinatown" and "The Bridge On the River Kwai."
Netflix is being pretty smart about introducing this new service. Initially, only a limited number of customers will be allowed access to the new service. Then, about 250,000 new customers will be added each week until every subscriber has the option to use the service by June. Netflix wants to make sure that its computers can comfortably handle the workload. The company has alloted over $40 million to add this service.
The system works by streaming video directly to the customer's computer rather than downloading it entirely. The show begins almost immediately after the customer places the order and the customer must stay on-line during the show. Netflix's innovative system is also designed to adjust the picture's resolution based on a user's cable bandwidth so that the movie doesn't freeze during play.
Despite its limitations, the online delivery system represents a significant step for Netflix as it tries to avoid obsolescence after the Internet becomes the preferred method for piping movies into homes. Even though the company has been growing and is profitable, its stock has been dropping steadily lately as experts predict the company will eventually become unprofitable as the Internet slowly becomes the movie delivery system of choice. I am not sure I agree with this outlook, but what do I know.
Online movie delivery already is available through services like CinemaNow, MovieFlix, Movielink, Vongo and Amazon.com Inc.'s recently launched Unbox. Apple Inc. also is emerging as major player, with hundreds of movies and TV shows on sale at its iTunes store and a new device that promises to transport media from a computer to a TV screen.
But none of those online services have caught on like Netflix's mail-delivery system, partly because movie and TV studios generally release their best material on DVD's first. The studios have had little incentive to change their ways because DVD's still generate about $16 billion of highly profitable sales.
When I get access to this new service, I will definitely give it a spin and let you know the results. Like all new toys, I look forward to it.
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