Netflix evolves its business model

MOVIE SUBSCRIPTION service Netflix added support for its future business model Tuesday by announcing a direct-to-TV movie streaming set-top box for its broadband Internet connected customers, the Associated Press reported.

Netflix has offered movie streaming over the Internet to all of its 8.2 million subscribers for a year, but the service hasn't been wildly popular because it doesn't offer the very latest film releases and practically requires a personal computer for viewing.

The 5-inch by 5-inch device built by Bay Area startup Roku hooks up directly between a DSL, cable or wireless Internet connection and a TV and is priced like a DVD player at $99.99.

That's a relatively attractive hardware price point compared with similar but pricier Internet-to-TV streaming boxes marketed by Apple and Vudu, which cost $229 to $295.

Netflix anticipates that LG Electronics will also include high-speed Internet streaming capability in a Blu-ray DVD player due out later this year. It further says that two other large consumer electronics manufacturers are currently developing set-top boxes that will work with its movie streaming service.

The company presently sends most of its subscribers DVDs via US mail from its catalogue of over 100,000 movies and TV shows, but Netflix expects that business volume to gradually decline as more US households get broadband Internet access and competing entertainment delivery channels become more aggressive. Its library of high-speed Internet streaming content currently holds only somewhat more than 10,000 titles, but that number will likely increase.

All Netflix subscribers who spend at least $8.99 per month receive unlimited access to the streaming service, in which the company has invested over $40 million so far and which it calls "Watch Instantly."

Netflix CEO Reed Hastings said, "We think this is something that offers a big value at a low cost." µ

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