mSpot beats Netflix and Blockbuster to the punch with mobile movie-streaming service

Finally, a movie-streaming service for the iPhone. One that lets you rent and stream movies directly to your mobile device, anywhere with 3G or Wi-Fi. You would expect this to have come from Netflix, right? Or at least Blockbuster? To the contrary, the company that’s gracing us with this killer feature is mSpot, a Silicon Valley-based startup you’ve probably never heard of.

In fact, you’ve been able to stream movies to your mobile phone via mSpot for over a year, but you had to do it in your browser and it wasn’t available on many handsets. A few months ago, mSpot extended its streaming service to regular old PC browsers. It also works on iPad, but they’re definitely not the first on that device.

Today, mSpot announces the availability of a native iPhone application for streaming and downloading movies. I got to test it out over the weekend and was thoroughly impressed. I tested the two-hour-long Lock, Stock, and Two Smoking Barrels on 3G and WiFi. It streamed without a hitch.

You can even pause the video while watching it on mobile and then pop into your web browser to continue, or vice versa. I did have a few problems. For example, the resolution was imperfect for Lock, Stock, and Two Smoking Barrels – and you can only keep the video for 24 hours, which sucks if you’re like me and often want to pause a video and finish it later. Also, there are only 900 videos available from Universal, Paramount, Disney and others. The price of the video varies from $1.99 to $4.99 depending on the movie, but most are $2.99.

mSpot faces competition from Netflix, Blockbuster, Redbox, iTunes, Hulu, though none of them can stream directly via iPhone yet. Through iTunes, you can download videos in full and then play them back via iPhone. However, being able to stream (especially via 3G) is light-years ahead of iTunes. It will be interesting to see this battle continue, and to finally see a fully integrated “three screens” approach to movie watching.