Last month I wrote a post called “Why I Am Breaking Up With Netflix” that outlined the reasons I was switching to BlockBuster’s Total Access after years as a loyal Netflix customer. BlockBuster’s new offering, which basically turns every mailed movie into a coupon for a free movie at any BlockBuster outlet, has been a huge success. BlockBuster now has 2.2 million members, adding 700,000 over the last two and a half months. In the arms race between the two companies, BlockBuster launched something Netflix has no answer to – intelligent integration between the website and BlockBuster’s thousands of retail outlets.
But now Netflix has fired back with a really excellent new service that could swing momentum back in their direction. This morning, a select number of Netflix’s 6 million subscribers will have access to a new Watch Now product that will stream television shows and movies to a Windows PC. The remaining members will be given access over the next six months. About 1,000 movies and tv shows will initially be available (including some hits – NBC’s “The Office” is included, for example). Studios contributing to Netflix’s new service include NBC Universal, Sony Pictures, MGM, 20th Century Fox, Paramount Pictures, Warner Brothers, Lionsgate and New Line Cinema.
The best part – it’s free.
Netflix is budgeting $40 million to cover licensing and overhead costs of the service over the next year, which will, by the way, wipe out most of their operating profit of $17 million or so per fiscal quarter. Unless of course this service results in millions of new subscribers.
The tv shows and movies will stream to a downloadable application, and viewing time will be limited based on what Netflix subscription plan the customer has. Subscribers to the $18/month plan, which is the most popular, will be able to watch up to 18 hours per month.
This will be significant competiton for the absolute avalanche of IPTV companies that have been announced lately. Expect YouTube, Joost and iTunes, Zudeo, CinemaNow, MovieLink and others, to all be competing for the same eyeballs with very different products.