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Netflix Urges Users to ‘Watch Instantly’ With Design Switch

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Notice anything different when you went to Netflix (s NFLX) today? If you logged on and were greeted with titles available through its “Watch Instantly” streaming video service, you weren’t alone — the company just switched up the order of its tabs to point users to its streaming titles first and foremost.

On the official Netflix blog, the company acknowledges the switch, calling it a “slight change…to highlight movies and TV episodes you can watch instantly on your TV or computer.” But that description downplays the strategic significance of the move, which could help reposition the company as a streaming video provider rather than a subscription DVD rental service.

From a strategic standpoint, the decision to point users to the streaming service makes sense. Consumers are gradually moving away from physical media toward to the convenience of on-demand availability. For Netflix, that means more customers steaming as opposed to waiting for DVDs to show up by mail. According to a recent study, 62 percent of Netflix subscribers had tried out the “Watch Instantly” service, and more than half — 54 percent — stream Netflix titles at least once a month.

That’s due in part to the proliferation of ways they can view the Netflix “Watch Instantly” service on the TV, among them the Xbox 360 and PlayStation 3 gaming consoles, the Roku player, TiVo, and connected Blu-ray players and TVs from consumer electronics manufacturers like LG Electronics, Samsung, Sony and Insignia.

From a financial standpoint, the push behind its streaming model makes sense as well. At NewTeeVee Live last month, Netflix CEO Reed Hastings said the company spends about $600 million a year on postage for its mail-order business, a figure he expects to grow to $700 million in 2010. But the cost of streaming a video title is much cheaper than shipping by mail — about 5 cents a gig for bandwidth — or about a nickel per movie — according to Hastings.

Netflix will no doubt continue to operate both its streaming and DVD-by-mail businesses simultaneously — but by making its “Watch Instantly” service the first thing its subscribers see, it’s clear that it sees streaming¬† as its future.

14 Responses to “Netflix Urges Users to ‘Watch Instantly’ With Design Switch”

  1. The quality is great on my pc system with 12mbps connection. Main problem is that the titles are rather slim. I think a couch potato could easily watch up half the online titles in just a few months.

  2. Agree with most that choices for watch instantly are lacking in quality. I’ve read that the real hold up is the studio system, they just won’t let Netflix stream newer releases until they’ve milked all the money from all the other channels first. If Amazon would at least lower its price a little, say $2.50 for a new release, the Netflix/Amazon combination would be hard to beat–I get both services on my Roku box, I’m waiting…

  3. Just got my ROKU and got Netflix 2 week trial.Online content is minimal and dated.Plus you have to load the content you want to watch on your pc before even seeing it on the Netflix que.
    Amazon is better.New movies at an average price .Dolby sound and picture is great.
    Goodbye Netflix….
    Why would anyone want to wait for a dvd to come in the mail?
    I check my snailbox once a week.

  4. Interesting, I thought the recent change was a preference in my cookie not a change in Netflix per se.

    Netflix is pushing streaming like crazy, this is a good thing, but the content still sucks. Mostly older titles. However it is not Netflix’s fault. The royalty fee for new releases is financially prohibitive, and as we see with Red Box, the studios do not make it any easier.

    Unless Netflix figures out a way around this fundamental barrier, all the marketing dollars in the world will not get people to pay to stream “Tootsie” and old episodes of Lost.

    Gotta get more new releases out to make a serious shift to streaming.

  5. They also need to further iterate on the content offered. I am all about foreign films, and there is a good selection, but the bread and butter new Hollywood releases need to be better represented. There was talk of a premium version of “watch instantly” – it would be great to see a model where I pay $5 more bucks but get access to all HBO’s or Showtime’s content. C’mon Netflix, lead the way!!!