Netflix to deliver movies directly to TV
SAN FRANCISCO (AP) - January 3, 2008 The set-top box, to be made by LG Electronics Inc. as part of a
partnership announced late Wednesday, is designed to broaden the
appeal of a year-old streaming service that Netflix provides to its
7 million subscribers at no additional charge.
LG Electronics didn't reveal how much the set-top box will cost
when it hits the market in the summer or early autumn. Similar
devices made by Apple Inc. and Vudu Inc. cost $299 to $399.
A bevy of other gadgets designed to bring more digital
entertainment into living rooms is expected to be unveiled next
week at a major consumer electronics show in Las Vegas.
Netflix's streaming service is the cornerstone of the Los
Gatos-based company's strategy to retain and attract customers as
technology makes it easier to rent and buy movies within a few
minutes instead of waiting for them to be delivered through the
mail.
Although Netflix says its subscribers have watched more than 10
million movies and TV episodes through its "Watch Instantly"
option so far, the streaming service has been too constraining for
many subscribers.
That's because all the streaming service's programming must be
watched on a personal computer, unless the viewer knows how to link
a high-speed Internet connection into a TV monitor.
The set-top box is supposed to serve as a bridge that will
enable just about anyone with a high-speed Internet connection to
plug in a few wires so they will be able to access Netflix's Watch
Instantly feature on their TVs.
Subscribers will still need to use a computer to pick out which
programs they're interested in streaming. The selections, culled
from more than 6,000 titles available in streaming library, will
then show up on the TV screen.
"It's going to be very slick and easy," said Reed Hastings,
Netflix's chief executive officer. "We want the TV experience to
be very relaxing and not like visiting a Web site."
Depending on which subscription plan they have, Netflix
customers can watch anywhere from five to 48 hours of programming
through the streaming service each month at no extra cost.
The LG Electronics alliance is just the first of several
partnerships Netflix hopes to strike this year to extend its
delivery options beyond the mail. Although he wouldn't provide
specifics, Hastings listed video game consoles and high-definition
DVD players as other potential channels for Netflix.
"We want to see 100 Netflix-capable devices on the market,"
Hastings said.
With more than 90,000 titles available in its DVD library,
delivering movies through the mail is expected to remain Netflix's
primary money maker for years to come.
Nevertheless, Netflix has spent about $40 million on the
development of its streaming service during the past year.
The financial commitment hasn't been enough to convince many
investors that Netflix will be able to survive a widely anticipated
shift that that will turn DVDs into an afterthought as digital
downloading proliferates.
The persisting worries are one of the biggest reasons that
Netflix's stock price remains roughly 30 percent below its highs of
nearly four years ago, even though the company has become more
profitable while signing up millions of new subscribers since then.
Netflix shares fell 27 cents Wednesday to finish at $26.35.
Netflix's growth tapered off last year amid tougher competition
from Blockbuster Inc., but Blockbuster recently signaled it's
backing off in the battle by raising the prices of several popular
plans.
One of Netflix's most formidable threats yet may be looming just
around the corner, with Apple reportedly preparing to launch an
online movie rental service that is supposed to include titles from
News Corp.'s Twentieth Century Fox and Walt Disney Co.
Apple so far hasn't commented on the reports, which have
predicted a formal announcement will be made at the Cupertino-based
company's Macworld conference later this month.
An online movie rental service could give more people a reason
to buy Apple's device for delivering programming to TVs. The
gadget, called Apple TV, so far hasn't taken off like the company's
wildly popular iPod and iPhone. Piper Jaffray analyst Gene Munster
estimates about 1.8 million Apple TV devices had been sold through
2007, but he expects another 2.9 million units to ship this year.
"If (Apple) does what has been reported, they will reach a very
big market," Hastings said. "But the addition of Apple to the
rental market isn't causing us to lose any sleep."
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AP Technology Writer May Wong in San Jose contributed to this
story.