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Summary:

Today just might be the happiest day for all my friends who worked for networking and telecom companies at the turn of the century, but lost their gigs thanks to the greedy machinations of Broadbandits. They are soon going to find new employment, thanks to collective […]

Today just might be the happiest day for all my friends who worked for networking and telecom companies at the turn of the century, but lost their gigs thanks to the greedy machinations of Broadbandits.

netflix.gifThey are soon going to find new employment, thanks to collective delusion of companies big and small. The new idea? They all want to offer consumers online video (including movies) to watch on their PCs – an unproven market – which is looking as crowded as midtown Manhattan during rush hour.

Lets check off the players for now – Amazon, Movielink, CinemaNow, Apple and a bunch of others who I refuse to remember because a brain only has limited capacity for names that will soon be relegated to the dustbin of failed ideas. Latest to jump headfirst into a pan of boiling oil is Netflix, which is going to spend more than $40 million in order to offer a streaming video service that would allow you to watch but not burn the movies on DVD or other media.

I thought you could do exactly that with any cable company’s video-on-demand service. And you can‘t watch those movies on your big screen, no software required. Just because a company thinks it can stuff DVDs in an envelope, it can make a go of the online video business. Remember all those people who got into online music business, only to leave with lighter wallets and bruised shins.

Here are some fun facts about this “new offering” from Netflix:

* It’s streaming, not download. GOT that!

* No burning video to a DVD

* Still, this is free to existing subscribers, the only “applaudable” move by NetFlix. Or, as Donna Bogatin says, “unlimited DVD rental does not equate to unlimited online movie watching.”

* Only 1,000 titles will be available, or less than 2 percent of the Netflix catalog.

* You need a 3 megabit/second connection to watch a DVD-quality movie. Oh, let’s see how those discount DSL users really feel about the picture quality of NetFlix.

“It’s a nifty marketing gimmick for Netflix … it’s not a breakthrough in the web-based movie distribution business. .. it’s just streamed movies over the Internet,” writes Cynthia Brumfield. Word!

  1. Blockbuster is eating their lunch with their new Total Access subscription plan and and now Netflix wants to add a new distraction. Streaming movies on a computer is not the answer and never will be. This looks purely like a PR move to let The Street know they are developing their own digital plans.

    I can think of a few things I would spend $40 million on before this.

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  2. Ah yes, 3MB connection. We have the lower one, the 1.5 MB connection. We watch lots of video on our TV (TV hooked up to computer via s-cable). My wife, who really is not interested in the details, knows one thing. Streaming video pauses and it pisses her off. We are Netflix subscribers, but I don’t think we will be streaming movies. Netflix via mail is good enough for us.

    Besides, with all the stuff at peekvid.com, who needs streaming Netflix? We will just go watch House and Sienfield episodes. Sure, it is flash from dailymotion and bad quality, but at least it does not pause.

    My wife was all excited to get a “fatter pipe” until she saw how much they charge… Now she says…”Ishnogood”

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  3. They should give that $40 million to ijigg.com, a site that just launched yesterday but is on the first page of digg today. The beauty of any system, online or off, is its simplicity AND quality, or lack thereof. The streaming media market exists in the United States, provided that services are as simple as operating a TEEVEE AND the quality is AT LEAST as good as analog cable.

    I don’t think that this is terribly hard to achieve, especially because not all of us are near our tv sets with a nice digital cable box, but we do have laptops with highspeed internet that are perfectly suitable devices for watching on-demand movies.

    The idea is not that one thing will take over another thing, but that ultimately more choices will exist for end-users who are on the go.

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  4. I don’t know Om…I think this is pretty killer.

    One thing that I really want is a basic cable subscription, but where every show is time shifted and I can watch it whenever I want. That’s basically what netflix is trying to do.

    And this isn’t just a gimmick. They’re putting $40 million into this, which is most of their operating profit. It’s a big bet.

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  5. Easy on the criticisms!
    Apple simply made an MP3 Player, but they did it better. HP a printer, but again, better. Sure, Netflix quality may not be ideal, its streaming, and I can’t burn, but it is better simply because it is paid for through a service I already have. I don’t have to pay someone else, have another set of terms, or marketing newsletters to delete. I can now watch movies from anywhere, conveniently, with no additional cost. Hooray for Netflix!

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  6. I think Om is missing the point here. Sure the offering is weak right now, and PC only right now.

    However, ever tried to find something to watch on your cable TV’s video on demand service? Not a whole lot of variety.

    What makes me salivate about the Netflix offering, is the future potential of their 70,000 items on catalog. We’re finally getting to the point of being able to watch anything at any time, not today, but hopefully in the near future.

    At some point also, I fully expect Netflix to be a source on AppleTV so we can browse the catalog, and stream directly to TV. Other providers may also talk with AppleTV and other similar devices to act as a streaming source.

    Its the potential that rocks, not the immediate capabilities of this service.

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  7. I have to agree with you, Om, this is a pretty stupid move. For one thing, people don’t sit in front of PCs watching movies. They lie in bed, they lean back on sofas and eamon chairs, … you get the idea.

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  8. I am a longtime Netflix subscriber and I think it’s a great idea. Why it cost them $40 million to build out I dunno but it’s a great idea still.

    To the other poster who said streaming video “ishnogood” I can only point to Fox’s offering. They have found the perfect delivery platform that streams beautifully in the best quality I’ve seen on even very low speed connections. Check it out:

    http://creative.myspace.com/VOD/prison_break/index.html

    For $40 mil I’m sure Netflix can offer at least that much. Whoever it was at Fox that made the choice to use that codec and platform deserves a raise. It kills ABC’s and CBS’s offering quality-wise. Although ABC’s is more attractive. http://abc.go.com

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  9. Well, I was looking forward to at least trying it out, and then found out that despite my having a 15mb connection (FIOS), I wouldn’t be able to do that on either 1) my desktop (Win2K) or 2) my primary laptop (OS X).

    Nice move, guys.

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  10. i am going to hold my ultimate opinion until netflix gives me access to the new service and I can try it out myself. that being said, i feel pretty optimistic about this idea and i am unsure as to why you doubt it so quickly Om.

    I am not sure you can equate cable provider’s on-demand to this service netflix has proposed. with cable you can get maybe 100-150 movies at a time on demand (this is including HBO, STARZ, SHO) and the movies are only available for a defined period of time, then they disappear. Not to mention the quality of movies provided by cable is exceedingly low. Not to mention network tv shows are not included in cable on demand either. 1000 movies is a great start. I am sure this will quickly expand to a larger number of titles, or maybe that is my optimism poking through.

    this next point primarily concerns me, but i have no qualms with streaming an almost dvd quality movie on my macbook pro core 2 duo. the tv is boring, now i can pick from 1000 movies to watch anywhere i want, whenever i want, and i don’t have to go through the hell that is stepping into a blockbuster retail outlet.

    i should really start writing for netflix.

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