Wednesday, January 17, 2007 - Page updated at 12:00 AM

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Netflix service delivers movies, TV shows to PC

Seattle Times retail reporter

NEW YORK — Reed Hastings counted to five slowly, looking slightly flushed. It was the amount of time needed to begin streaming "The Motorcycle Dairies" online in front of a roomful of his peers. "This is incredibly stressful," he quipped.

Hastings, the chief executive of DVD-by-mail company Netflix, introduced a feature Tuesday that allows subscribers to instantly play movies and TV shows on their personal computers for no additional charge.

Hastings unveiled the streaming video service at the National Retail Federation's 96th Annual Convention & Expo in New York, where he was named "Retail Innovator of the Year." The world's largest retail trade association holds its annual conference at the Javits Convention Center here through today.

The company, based in Los Gatos, Calif., plans to phase in the service over the next six months. Subscribers can access 1,000 movies and TV shows by clicking a "Watch Now" tab on their home page.

Netflix in 1998 revolutionized the movie-rental market by offering consumers rentals by mail for a subscription fee and forgoing late fees.

Subscribers receive a certain number of viewing hours based on their level of plan. A customer who pays the standard $17.99 subscription fee, for instance, can play up to 18 hours of movies and TV shows online each month.

The major Hollywood film studios have faced increasing pressure to sell movies online as box-office receipts steadily decline and peer-to-peer networks offer illegal movie downloads for free.

While Netflix joins the ranks of other high-profile technology companies that have unveiled digital movie services in the past year, none has been widely adopted.

Online retailer, based in Seattle, and Apple Computer last year introduced competing digital movie-downloading services.

These services, however, have been hindered by viewing restrictions and inconvenient download times that have discouraged mass adoption.

Movies downloaded off of Amazon, for instance, cannot be transported to another device or burned to DVD.

Jupiter Research senior analyst Joe Laszlo said consumers choose a digital movie service based on the breadth of movie titles, the price to rent or buy a movie, and the ability to play a movie across multiple devices.

None of the services so far offers an easy way to watch movies the way consumers prefer — on television. "Stealing anyone else's thunder implies there's thunder to steal," Laszlo said of Netflix's announcement. "Right now, there's rumbling in the distance."

Microsoft launched a video download service for its Xbox 360 game console Nov. 22, allowing users with a broadband Internet connection to download content from Xbox Live Marketplace and store it on the console's hard drive.

The console, typically attached directly to the television, circumvents the problem of moving downloaded video content from the PC to the big screen.

Television shows and movies — which can only be purchased, not rented — are available in both standard- and high-definition. New releases in HD cost about $6, paid in Microsoft Points, which are sold in blocks. A standard-definition new release is about $4.

Hastings said the digital movie service would eventually shape up into three categories:

• Ad-supported movies provided by Internet search engines Yahoo! and Google.

• Digital purchases, led by Apple and Amazon.

• Digital rental, the service Netflix provides.

Netflix hopes to deliver movies across electronic devices — from cellphones and laptops to set-top boxes — within the next 10 years, he said.

For now, the service gives it an advantage over rival Blockbuster, which has been heavily marketing the option to return an online DVD rental to a store and immediately rent another movie — a service Netflix can't match because it doesn't own physical stores.

Laszlo, of Jupiter, said Netflix will perhaps get a feel for the market and see what consumers like. "I think all of these services are likely to go through growing pains," he said.

Amazon and Apple announced their competing services within a week of each other in September.

Amazon's Unbox service allows customers to download TV shows for $2, rent a movie for three days for $4 and purchase a movie that can be stored on a computer for between $8 and $15.

Apple sells movies from four movie studios owned by The Walt Disney Co. for $15 for new releases and $10 for older titles through its iTunes Music Store.

Also in November, Wal-Mart waded back into the video-download service after withdrawing in May 2005.

Wal-Mart customers have three options, ranging from $2 for downloading to portable devices to $4 for downloading to any device, during its beta-testing period.

Seattle Times business reporter Benjamin J. Romano contributed to this report.

Copyright © 2007 The Seattle Times Company


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