Netflix Switching to Web Delivery

Netflix, the online DVD rental firm has plans to deliver films via the internet by 2005: “Our strategy is to get huge in DVDs and then expand into downloads,” Reed Hastings, Netflix Chief Executive, said to Reuters.

Netflix’s business model currently operates around the postal service – users browse the Netflix site, selecting titles they wish to view. DVD’s are then delivered to the company’s 1.9 million subscribers by post. Cutting out the postal service will pay for online delivery and allow Netflix to invest in more content. Hastings estimates that a download service will have 5 million subscribers by 2006.

Netflix currently charge US$20 (€17) a month for their postal-delivery service, and are proposing a US$22 (€18.50) per month charge for their download offering.

Netflix don’t want to download to computers, instead using a broadband connection direct to the TV set-top box – rather like Blockbuster’s unique VOD service in the UK.

Competition is going to be fierce – more movie download services are in the pipeline and Netflix will have to go up against strongly-backed groups like Movielink and CinemaNow. Movielink was formed by five major studios: MGM Studios, Paramount Pictures, Sony Pictures Entertainment, Universal Studios and Warner Bros. CinemaNow counts Microsoft and Blockbuster amongst their investors.




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Fraser Lovatt

Fraser Lovatt has spent the last fifteen years working in publishing, TV and the Internet in various capacities, and believes that they will be seperate platforms for at least a while yet. His main interests at the moment are exploring where Linux is taking home entertainment and how technology is conferring technical skills on more and more people. Fraser Lovatt was born in the same year that 2001: A Space Odyssey was delighting and confusing people in the cinemas, and developed a lifelong love of technology as soon as he realised that things could be taken apart, sometimes put back together again, but mostly left in bits or made into something the original designer hadn't quite planned upon. At school he was definitely in the ZX Spectrum/Magpie/BMX camp, rather than the BBC Micro/Blue Peter/well-behaved group. This is all deeply ironic as he later went on to spend nine years working at the BBC. After a few years of working as a bookseller in Scotland, ("Back when it was actually a skilled profession" he'll tell anyone still listening), he moved to England for reasons he can't quite explain adequately to himself. After a couple of publishing jobs punctuated by sporadic bursts of travelling and photography came the aforementioned nine years at the BBC where he specialised in internet technologies and video. These days his primary interests are Java, Linux, videogames and pies - and if they're not candidates for convergence, then what is?