Leaked Screenshots Show Netflix Downloads

Mike1024 writes "US DVDs-by-post company Netflix appears to be planning a service that will let users download movies over the internet. Hackingnetflix.com has some accidentally-revealed screenshots, and the Netflix jobs page includes a product manager position, saying "The Electronic Delivery Service (EDS) will augment Netflix's current DVD delivery model with high quality movies delivered to consumers' home TVs through the Internet, on a subscription basis". Apple's iTunes demonstrated many people are willing to live with some DRM and hardware/vendor lock-in."

Goodluck...

As long as it's better than http://www.cinemanow.com/ [cinemanow.com] Nothing worse than watching bad movies AND having to buffer every 5 minutes.

Hopefully not overzealous

The problem with efforts like this is that they tend to be overzealous with the copyright efforts to make sure nothing is copied. Ultimately their efforts sabotage the product and no one buys.

What is interesting is that they are claiming internet downloads to be watched on TV - which is quite different than internet downloads to be watched on a computer.

Not necessarily

DRM only becomes a problem when it inhibits the actual use of the product. ITunes and the IPod have been wildly successful because the average person is almost totally unaware that there's DRM involved. They download music, it plays on their computer and it plays on their IPod so what do they care.

The most recent effort I saw for this was a service where you could download a movie file for a fee but could only play it within 30 days and once played it would only remain playable for like 24 hours. That's problematic. In this case though, I should think the downloads would be consistent with the NetFlix style of movie watching where you can have so many movies available at a time but for an unlimited time. If that's the case it will be far more viable.

My ideal would be if I could take a netflix downloaded rental and play it on my TiVo. If I have to hook up a computer to my TV, it's a bit more of a hassle. I haven't been a NetFlix member for a while now because I got tired of discs piling up that I never got around to watching, but if I can download a movie in a few hours I may resubscribe.

Re:Goodluck...

you know leaving the house for 5 mins to interact with other humans [even if they work retail they're still human].

Uuh, last I checked, the blockbuster "human" you talk to after hours has a slot for entering your credit card, and another, larger one for spitting out VHS tapes or DVDs.

As for real humans behind the counter during working hours, well, if you like talking to pimply teenagers...

Re:Goodluck...

I was under the impression Netflix is quite a bit cheaper then your local rental store. I know it's popular to make out anyone using online products must be avoiding human interaction, but when it's cheaper it's completely unwarranted. Then again this is slashdot so enjoy your +5 Funny mod. I'm content to receive a -1 Troll.

Re:Goodluck...

True, because nobody lives in small towns that feature video stores with horrible selections of videos.

There do still exist people in North America for whom the drive to a decent, well-stocked video store is much, much more than 5 minutes...and many of them do have access to broadband. Entire towns full of such people exist, all across the midwest and mountain west.

Not everybody lives in metro areas...even small metro areas.

Re:Goodluck...

Hell, even here in the Detroit area we can only rely on one single video store [thomasvideo.com] having a good selection of odd videos, and they are still a good half hour from my house. The other problem is that people have a tendency to steal rare / out of print films making them hard to see.

Even in more metropolitan areas it's often hard to find smaller run films. Most people I know resort to buying everything because there is just no other way to rent them.

(There's nothing like going into Blockbuster, asking for Brazil, and being directed to the travel section.)

Re:Goodluck...

I prefer to interact with humans inside the house. See, I have this thing called a girlfriend and... well, I better not go into too much detail. Suffice it to say that, while going to Blockbuster is technically human interaction, it does not meet my standards.

Re:Goodluck...

Its not about the convenience, its about the selection and the availability.

Even Blockbuster with its "Guaranteed In-store" policy is occasionally out of a movie I'd like to see. A downloaded version won't have the problem of being "out". Plus your selection on downloaded movies will be much greater.

At the end of the day, this is about the same thing as pay-per-view on demand, only with a much wider selection, and possibly a more consumer friendly pricing model.

Wow.

It's a screenshot of a login box. Exciting stuff.

Re:Wow.

I'm the guy who submitted that news to hackingnetflix. I actually just scraped that HTML by copying it from my account page and pasted it into my gmail that I sent to hackingnetflix. It wasn't a screenshot at all. The save button was probably below the stuff I grabbed.

anyone surprised?

This really shouldn't come as much of a surprise to anyone, since it was announced last fall [slashdot.org] that Tivo and Netflix had worked out some sort of agreement for downloadable movies...

That's a Lot Of Bits

Downloading movies seems like a lot of bits to push over the average consumer's pipe. Tie in a pre-constructed box for it (and who exactly wants to buy yet another home appliance when the computer will do?) and it sounds like an infrastructure mess.
I wonder if consumers will be happy waiting for hours while their movie is delivered? Especially if the Blockbuster is just around the corner. Of course, it beats going out, but at what price? Something about the business model just doesn't add up to me.

Night Of The Living Parrots [whattofix.com]

Re:That's a Lot Of Bits

I currently wait two days for my Netflix movies instead of going to the Blockbuster around the corner (1 day to ship to Netflix, 1 day for the movie to come back), so I don't see why waiting a couple of hours would be a big deal.

And no, I don't use Netflix because I'm lazy (it's really more of a hassle than going to Blockbuster). I use Netflix because they have a HUGE selection of movies. Their buisness model provides for a much larger selection of movies than a brick and morter store. And going to a "movies on demand" format can only help to increase their selection, it sounds great to me (since I don't tend to watch the normal summer blockbuster style movies and instead watch more obscure stuff)..

Re:That's a Lot Of Bits

"That and they'd have 9000 copies of "Adam Sandler Acts Like A Total Fuckhead, And Women Still Spead Their Legs For Him" and one copy [MAYBE] of that obscure independent film I'd been looking for."

I've noticed that different Blockbusters will stock different titles based upon the neighborhood they're in. In my general area, there are three Blockbusters, one in each socioeconomic area: one in the upper class area, one in the middle class area and one in the lower class area. Having been to all three, it was very evident to me that the quality of selections slides downhill as you go down the economic ladder.

The "good" store has tons and tons of indie films, as well as all the popular and standard catalog titles. Large foreign, special interest and anime sections. Virtually all titles are DVD and widescreen-only. Only a small handful of VHS titles for much older and obscure films.

The "middle" store has a smaller selection of indie films. There are some foreign titles intermingled among the catalog stuff by genre (how it really should be, IMO). There is a greater emphasis on new release, pop culture titles and there are both widescreen (16:9) and full screen (4:3) DVDs. Most titles are on DVD only, but there is a visible amount of stuff on VHS still.

The "bottom" store has a significant focus on new release pop titles, with very little in the way of independent films. Good luck finding foreign films, regardless of quality or genre. Most of the older catalog titles are VHS, whereas the same titles are on DVD at the better stores.

The question is, does Blockbuster cater to the demands of the neighborhood they're in, or do they simply follow socioeconomic demographics (ie stereotypes) when they stock a store with videos?

BTW, the "middle" store recently shut its doors for good, which signals to me the widening gap between rich and poor in this country, but that's another discussion :)

Re:That's a Lot Of Bits

For a full dvd disk image, its 4 gigabytes. They'll most likely use compression, but even if they didn't its still doable.
The average download speed I'm seeing on residential cable is now 6megabit. google says:

(4 gigabytes) / (6 (megabit / second)) = 1.51703704 hours

Or, roughly a little longer than it takes to watch it. Buffer for 30 minutes or so and you could stream the rest.

With FIOS and other closer to true broadband internet connections becoming much more common, it makes even more sense(FIOS's common package is 15/2):
(4 gigabytes) / (15 (megabit / second)) = 36.4088889 minutes

Most good codecs can squeeze a movie down to 1.4 gigs or so, so downloading is entirely an option. Streaming VOD as yous uggest would work just as well, but theres no reason you couldnt keep a copy.

Re:That's a Lot Of Bits

For a full Dual-Layer disc (and I really can't remember the last time I saw a retail movie come on a single layer) it's 9Gb, not 4, so the numbers are even worse.

Besides, basic broadband packages in the UK usually have monthly download limits in the ~3Gb range. So it's not the 24-hour wait for the download, it's the 30-day wait until your ISP will let you have the next one.

Re:That's a Lot Of Bits

Funny, Netflix seems to doing just fine with the "be happy waiting a few days" business model. Why do you think a few hours is a worse one?

I use Netflix, and the thing is they send you more than one movie at a time (depending on your subscription). I can set up the list of movies I want to watch, and I almost always have one on hand when I want to watch something. The other great thing is no more wandering around a movie store looking for something to catch my eye. Currently I've got over 100 movies in my queue - I'll probably never see them all.

I imagine any kind of download service will be the same way - I can download multiple movies, so I always have something available. After I delete the last movie I watched the next one in my queue will be downloaded. Probably a lot like their current service, just faster.

Re:That's a Lot Of Bits

I don't think there's a problem with bandwidth. What does your computer do all day with the bandwidth? Nothing. Most everyone has plenty of bandwidth to spare.

Especially if the Blockbuster is just around the corner. Of course, it beats going out, but at what price? Something about the business model just doesn't add up to me.

As another poster mentioned, Netflix is in cahoots with Tivo. As such, I'd expect TV and movie delivery over the 'net. I'm intrigued to see how they'll price it out. I'm not sure how much I'd be willing to pay to rent a show or movie via this mechanism. I would, however, be interested in purchasing movies and TV shows.

O/T Addendum: it just occurred to me that the Xscale processor would be more than able to handle video playback on a PSP-like device. Could this be further impetus for Apple's IBM -> Intel switch? i.e. a forth coming "Apple PSP", if you will, with ensuing iTMS service for movies/TV/games?

Re:That's a Lot Of Bits

I don't think there's a problem with bandwidth. What does your computer do all day with the bandwidth? Nothing. Most everyone has plenty of bandwidth to spare.

I think your ISP may disagree when half their customers start saturating their pipes 24 hours a day so that they can watch a new movie each night.

Re:That's a Lot Of Bits

Using mpeg4 and supply barely broadcast quality (not even DVD quality, nevermind HDTV) means a typical 90 minute movie would run between 1/2 and 2 GB. At today's brodband speeds this will range from 40 minutes (500M @ 3Mbps) to 5 hours(2G @ 768Kbps).

The sweet spot will likely be right around 1.5Mbps broadband and under 1GB movie size. Delivery would take less time than watching the movie, and so you order the movie, let it buffer for 10-15 minutes while you pop popcorn, etc, then start streaming the movie.

Delivery isn't a concern as long as the bit rate of the movie is about half your download rate, and a 300Kbps bit rate is bearable, a 768Kbps stream is about what you expect for ok cable TV.

While they won't be delivering at great quality, they will be getting consumers by the ability to get content on demand, for low cost, with a huge selection. Even home theater buffs will use the service simply because it's more convenient than waiting for the disc in the mail or leaving the house to pick it up - especially if the local video store is out of copies. Further, it'll probably be similar to the current system, but limited somewhat since the mailing delay is not built in. Pay $17.99/mo to get 12 movies per month (about 3/week). You can only have up to three movies on your player at a time, and can watch them at any time until you fill the slot with another movie.

What would be really nice is if one could select the quality and trade off downlaod time for quality, as well as queuing up movies so they are available on the player at the time of release (new movies are released on tuesday - download starts at high quality monday afternoon and unlocks at midnight).

And if they get large enough to push at the movie studios they may even be able to get movies before video store release dates, and possibly simultaneous with theater release. But these are very unlikely, due to the huge video store market.

But the biggest change for NetFlix will be that they can (if they work out licensing correctly) get around the limitation of their current list system. Right now you won't necessarily get the movies you want in the order you prioritized them. With downloads there's no limit - you can get the movie you want, when you want it.

-Adam

very realistic

If Netflix and TiVO work this out correctly, this is going to jam a sharp stick in the eye of pay-per-view AND Blockbuster. It may not seem convenient to you at a quick glance, but I'm guessing you haven't re-organized your TV usage through a Tivo or Netflix subscription. I'm not criticizing you, but pointing out that this makes sense to people who have.

Sure, downloading a movie is annoying to satisfy an immediate whim craving for a film. That's where the local video store cannot be beat. The TiVO-Netflix partnership trounces the local video store in new releases, however. Blockbuster may carry 100 copies of Batman when it's eventually released on DVD and make a big promise about availability. But Blockbuster doesn't do this for the smaller movies that you and every other film nerd in your neighborhood want to see. It'll stock two copies that'll be perpetually checked out.

Online Netflix means that you'll be able to create wish lists prior to the release of movies on DVD so that you'll be assured of getting them the day of their release. When you turn on your TiVO, you'll be greeted with a list of movies that have already downloaded, so it's not some deal where you have to actively select an online movie and wait for it to be transmitted. Besides, with Fiber-to-the-home looming in the future as well as IP-over-electric lines, our bandwidth future will speed up the download process for that scenario.

Seth

Being cracked

Someone is going to post : matter of days before it get cracked but it's not really relevant. If you crack it let's say you're able to send it over the internet for free... guess what it's already there anyway. So what's the point of DRMing it anyway ? Obtain agreements to sale online probably... their protection being cracked is the best thing that can happen to them.

Unintentinal "publishing" ala Harry Potter?

This reminds me of that Canadian Harry Potter injuntion: until the book has been "published", you can't do stuff with it. So a Canadian court issued an injunction to those who got it early, saying they can't copy/sell or talk about the contents --- until it gets "published" --- 4-real, in a few days.

How is the unintentional "leaking" of information via a website any different? Can Netflix say they haven't "published" anything yet, and then have the DOJ beat you down for Copyright violations?

Net downloads have their place

The idea of downloading movies over the net is certainly intriguing, and for many people who are unable or unwilling to leave the house to see a movie at the theater it seems to be a real boon. However, I wonder what sort of bandwidth is necessary to make the download of a movie bearable. Even the most rudimentary calculations reveal that most current bandwidth levels require an overnight download.

On the other hand, with sufficient bandwidth there is a major market for online movies, I think. With modern computers and video cards surpassing the video output ability of standard televisions, using the home PC as a video player is one possible evolutionary path for PC operating systems.

I certainly don't have enough bandwidth here that would make net downloads feasible, but I'm sure that the market exists.

Finally

Ìt's good to see businesses actually try and use the advantages of the internet for content distribution, instead of trying to litigate to preserve an ancient business model.

DRM thoughts

As the poster suggested, with the huge sales of iTunes it seems that DRM isn't something that a lot of consumers care about too much. Interesting as a lot of slashdotters seem to feel the opposite.

Re:DRM thoughts

DRM isn't something that a lot of consumers care about too much. Interesting as a lot of slashdotters seem to feel the opposite.

DRM also isn't something most people understand at all, unlike most slashdotters. When someone tries to put a song they bought from the itunes music store onto their Sony brand mp3 player and can't get it to work, 9 times out of 10 they will blame the sony player. When a song bought from Napster 2 can't be transferred to an ipod, customers often blame the ipod. They don't understand that the behavior is intentional and if you explain to them that it is most people think it should illegal. Once someone understands DRM they dislike it, but very few people ever get to that point because it is a hard concept to grasp and as most americans know... thinking is hard.

Well, yeah.

Apple's iTunes demonstrated many people are willing to live with some DRM and hardware/vendor lock-in.

People don't mind this as long as the DRM allows the consumer to do what they want with the media. As long as I can listen to my music when and where I want it's no problem. When the DRM is used to limit where and when I use what I purchased, that's when people get upset.

It will be interesting if netflix learned this. If I pay a fee and can only watch the movies when, where, and on what netflix decides, they won't get my money. We'll see.

Re:Well, yeah.

"What vendor lock-in? People are willing to put up with Itune's DRM because it's simple to "break" (merely convert it to another format, it's something even I would be able to do, and I know very little about computers), therefore there is no vendor lock-in."

I see these sorts of comments on /. on a daily basis, and yet they still surprise me. Don't you have any non-geek friends? Almost no one cares about Apple's DRM - outside of /. types. Heck, most people don't even seem to realize there is DRM present at all!

CSS and Macrovision DRM

And you can garuntee that the population will accept it because the consumer population will have no choice but to accept CSS and Macrovision and other forms of DRM.

They won't allow the viewing public to use the 1080i resolution unless they can lock in down as much as they can. However ethically repugnant and offensive it may be to someone informed.

Because its convienent, becausee its easy.

pretty cool

the mail is what keeps me from using netflix. i know it sounds lazy but having to wait for the movies to arrive and then send them back is such a hassle.

ideally i'd like to get movies through itunes, pay something reasonable like $4.99 for _just_ the movie no special stuff. IMO that would be as good a deal as the .99 per song thing.

Greencine doing this already?

I subscribe to Greencine, and the little tear-off flier that you remove to convert the receiving mailer into the sending mailer has a little inset image of a DVD player with a "DivX Video" logo on it with the captions:

"IF YOU OWNED A DivX® Certified DVD PLAYER, YOU COULD HAVE WATCHED THIS MOVIE YESTERDAY!

"Download, burn, and enjoy GreenCine movies in hours with DivX VOD.

"FOR MORE INFORMATION VISIT VOD.DIVX.COM/HOW [divx.com]"

Of course, when I try to go to that URL, it times out, so who knows?

The Economist also has info about this

http://economist.com/people/displayStory.cfm?story _id=4149765 [economist.com]

I hope it is not exclusive to Tivo.

I reluctantly dropped Tivo a month ago to switch to the cable company's offering. My new DVR can record two HDTV channels simultaneously, while the Tivo hadn't seen significant updates since 2001. (Besides their HEAVILY DRMed copy to PC. You need to enter in a password everytime you watch a show.)

Hopefully someone will provide an inexpensive way to show these movies. Perhaps a small set-top device provided by netflix in exchange for a service contract that can download a movie or two for later viewing.

DRM & Vendor Lock in?

So they are working on delivering movies encumbered with DRM, and lock people to their platform. And this is progress? I feel like we are moving back in time here...

We as consumers need to really put our food down on this DRM crap...

Movielink?

Movielink [movielink.com] has been doing downloadable Hollywood films for a long time now. Not sure why everyone overlooks them when talking about the iTunes Movie Store and NetFlix, but they've been in this game for a while.

We're going to have to live with DRM

As much as DRM irks me, I don't think we can expect to live without it. With technologies like Bittorrent out there, content providers can't claim to have an exclusive on high-speed downloads, and the studios are never going to sign on if they're going to be willingly providing source material for unlimited transfer and reproduction.

Now frankly I'm a bit of an anarchist. I don't like the big studios or the big record companies, and I think the quality of our entertainment would be improved a great deal if they were to all go out of business as a result of massive piracy. However, I'll admit that that opinion isn't terribly valid.

What we need to be arguing for is reasonable DRM from big content providers, and no built-in DRM on hardware, which endangers the freedom of content created outside of the system. In the case of Netflix, I can't imagine we have much to argue for; It's never been kosher to make a "backup" of a rented movie. But if they start *selling* movies online, then the right to make a DVD playable on standard players from the file should be fought for.

oblig. BT comment

You know, this service really could benefit by using BitTorrent technology ;)

If cost is king to the operation, they would love nothing more than to have hundreds or thousands of people across the country downloading the movies from one another. Think about it.. Friday night, movie night.. parents still at work login and request a movie.. kids get home from school and kick off a download right on the TiVO. It'll be ready by movie time. Netflix doesn't get killed with bandwidth bills and passes the savings on to the consumer. (cue the "yeah right!" posts)

I'd sure like to see Torrentocracy (and the similar idea described herein) ported to my hacked series 1 standalone. I, too, have one of those dual-tuner HDTV Comcast DVRs, and my trusty ole' S1SA is on the chopping block. Something like that just may save it.

No more free DVD's for postal workers?!!

Recently I've had a rash of Netflix DVD's stolen in the mail, both coming and going (and I mail the out bound ones at work). Netflix is close to cutting me off. I assume this is because the DVDs are so obviously packaged, and DVD players are common now.

Will they be using BitTorrent for this....

or will they cut their noses off to spite their faces? (i.e. or spend loads of money on the extra bandwidth they need).

what's the big deal?

Is this news? Didn't various Netflix corporate leaders make open comments about download plans several months ago?

Netflix Player

It's not a new story (and I didn't submit it to /.), but the fact that they are testing the product and it looks like a Tivo login is interesting. Netflix really hasn't said much other than they have a deal with TiVo and the service will be "underwhelming."

The screen capture also has the name of the new device: Netflix Player.

Mikek / http://www.hackingnetflix.com/ [hackingnetflix.com]

How do you lock people into a rental?

The post says how people accept the iTunes DRM and lockin, but there is no way for Netflix to similarly lock people in because you won't own any of the films. I could easily switch to Netflix copycat A and start renting downloads from them since I wouldn't have a library of Netflix stuff since one doesn't keep rentals. DRM lockin only works when you own something.

DRM

> Apple's iTunes demonstrated many people are willing
> to live with some DRM and hardware/vendor lock-in."

Or are willing to pay for their music and then liberate it using Jhymn [hymn-project.org].

Old news..

Netflix plans were also discussed in the economists this weeks issue. Here is a link to the an excerpt of the article :

http://www.economist.com/displaystory.cfm?story_id =S'(X((RA'%25%20P%224%0A&tranMode=none/ [economist.com]

So is this going to be included in 17.99 / month?

I download movies from Starz Ticket on RealOne [real.com] all the time. They don't have the latest or the greatest, but at any given time there are over 300 movies (plus all the extras you get on DVDs), and that's more than enough to choose from. A typical (500-600MB) movie takes about 25 minutes to download on my 10Mbps OptimumOnline connection. I play them on my PC, turn off the monitor and switch to the TV out display. Plus I can watch a live Stream of Starz (the channel) with more latest movies that aren't available on demand. I pay only $13 bucks a month for that.

So now, if Blockbuster can make it this simple for me without asking me to shell out more bucks for Tivo service, I'd jump ship... otherwise I'm happy with next day home delivery of DVDs with all those deleted scenes.

Could be good for Netflix customers...

This could be good for Netflix customers, if they work out the techical and structure issues.

Personally, I want to be able to download certain shows and get the rest in standard DVD format. For example, if I rent an MST3K show then I don't care where I watch it - computer or TV - chances are good that I will only watch it once. A movie like Million Dollar Baby I want to watch on the large screen TV with the whole audio setup.

If they let me specify what shows to download vs. mailed DVDs then I will be very happy with the service. Otherwise I'll just stick to mailed DVDs that I can watch wherever I want.

Basic cable?

Um I get this feature from my basic cable, its called on demand and and I can go look at a list of movies and play them anytime I want for a fee or because I have some subscription movie channels I can watch any of the movies on those channels anytime I want for no extra charge. This seems to little to late too me.

offbase, new biz idea for netflix

I love Netflix, it makes winter a little more bearable up here. I thought of an online business model that cement their hold on the movies-to-home market.

The first step is a new, DIVX related codec that allows for two viewing resolutions for a movie. The files are distributed by BitTorrent or similiar, the more common the P2P format the better. The user can download any movie from the Netflix library/Torrent, and watch it at some low resolution (say 240x180 or 320x240) for free. If you want to watch the HD resolution version of the movie, put it in your Netflix queue and wait for the HD components of the file to download, then watch. This would kill, absolutely kill, the market for downloading illegal movie content. At the same time it provides an outlet for the end user to experience lo-rez versions of all their favorite movies and gives Netflix an almost-out-of-the-box Internet delivery solution.

I hope someone from Netflix reads Slashdot, because this could give Blockbuster, Amazon, etc, a serious run for da money.

Josh

Will all the non-US residents join me in my prayer

.. so that this thing does not do an IP geographical check?

Netflix is fine but it isn't "global" in the sense that you rely on physical transport. Netflix even has to setup local warehouses for faster deliveries.

However this on-demand download is truly global.
Sure they will require US credit card, fine I can do around that.

However, Imagine being able to download movies from your living room here in Europe *before* they usually hit the theaters? All this semi-legally (no p2p but you might be infringing EULA).

Movielink or whatever that was called did IP checks, hope NetFlix "forgets"...

Now, I need to talk my buddies in the US into sending me a Tivo box.

How does it/will it compare?

I have previously used movielink.com [movielink.com] but it requires IE and alot of windows voodoo. The actual service I was quite impressed with, other than the slightly high prices.

I would definitely be interested in this if it was more open, etc. (I realize that it's impossible to have them ship the *.vob files, but I would like some usability in the files. I want *my* definition of fair use, not Valenti's).

Playback via Tivo or PC?

Id be more interested if you could play back movies via a DVD player supporting mpeg4. I really dont see myself buying a tivo just to play movies.

Economist Article

See here [economist.com] for more info. Or read on.

Movies to go Jul 7th 2005 From The Economist print edition

Can Netflix's Reed Hastings succeed in the battle to deliver movies online?

LATER this year, Netflix will launch a new service for downloading movies from the internet. "It will be underwhelming," promises Reed Hastings, chief executive of America's leading online DVD-rental company. Despite a recent ruling by America's Supreme Court that gives entertainment companies more ammunition to fight against illegal file-sharing, movie studios are likely to remain extremely cautious about what films they make available for a fee on the web.

For now, that suits Netflix. Mr Hastings believes that the humble DVD--and, eventually, high-definition versions of it--will remain popular for some time, not least because that is what the movie industry wants: sales of DVDs and fees from rentals are an essential source of the studios' profits from new releases. But Mr Hastings is also betting that by the time movie-download technology becomes more mature and online titles more widely available, his subscriber base for DVD rentals will be big enough to put Netflix in a strong position to prosper in the online marketplace--where he is likely to face new competitors such as Yahoo!, Microsoft, the studios themselves and, no doubt, many start-up firms offering rival download services.

Changes in technology encourage start-ups with innovative ideas to enter markets, just as Netflix did in 1999 when--having been stung with a $40 late-payment from a Blockbuster video-rental store--Mr Hastings launched its subscription service. He was already a successful entrepreneur, having built up a software company before he started Netflix. For its most popular service, Netflix charges users $17.99 a month for an unlimited number of DVD rentals. Titles are ordered via the company's website and dispatched overnight. Customers mail them back in a pre-paid envelope, which releases the next movie on a personalised list of films to see. Subscribers can have up to three DVDs out at any time. Needless to say, there are no late fees.

The Netflix business model has proved to be such a simple and highly effective combination of the online and offline worlds that it has spawned imitators in Britain, France, Germany, Australia and Japan. Netflix, which is based in Los Gatos, California, was about to launch in Britain last year when it decided it had better withdraw from going international, for now, in order to concentrate on a life-threatening war on its home front. The all-conquering retailer, Wal-Mart, and Blockbuster, the world's biggest chain of video-rental shops, both decided to offer online DVD rental at lower prices. Amazon has since started to experiment with a DVD-rental service in Britain--but has not yet launched a similar service in America, and some suspect it may instead team up with an existing competitor.

Certainly, the cost of entering the market has gone up. Netflix has slashed its own prices and launched a one DVD out at a time service for just $9.99 a month. In the past year its share price tumbled as investors saw profits being pumped into an aggressive marketing campaign (costing nearly 20% of its revenues). The company expects to make a net loss of $5m-15m this year. Nevertheless, Mr Hastings says Netflix has $175m in cash and no debt. "We can sustain this for a very long time," he adds. Indeed, Netflix is showing signs that it is getting the upper hand. In May, Wal-Mart pulled out, awarding its online DVD-rental business to Netflix. Yet, tempting as it might be, Mr Hastings declines to trumpet that Netflix beat the world's biggest retailer. Indeed, Wal-Mart's bosses say they merely took a strategic decision to focus on selling DVDs rather than renting them. Netflix and Wal-Mart will now promote each other's products.

Meanwhile, Blockbuster, which lost $1.2 billion last year, hopes

Someone will find a way to hack it

Someone, somewhere will find a way to hack it. They always do. Proof that it is mathematically impossible to achieve copy-prevention for movies would be a device with a connector exactly the same as the back end of a cathode ray tube. Now you can get the red, green and blue video components directly from the three grid drive signals, and the timing information from the scan coil signals. And that's all you need to recreate the picture. The sound is easy.

If you really want to stop people copying what you're selling, you have to make the original cheap enough not to be worth the effort to copy. The free CDs and DVDs they give away with newspapers, for instance -- copying a CD or DVD takes time, ties up my computer, I'd rather just buy another copy of the paper already. Come to think of it, there's the paper itself. Even if I could be bothered to walk the extra couple of kilometres to find a newsagent with a photocopier in-store, it isn't worth it to photocopy even just the stories I want. My phone has a 2MPx camera and more memory than I know what to do with, but it's still highly inconvenient for photographing newspapers. You can achieve the same effect by providing some real added value collectable items with the CD / DVD -- tilt-it-and-watch-it-change pictures, brass Rizla holders, maps, posters, or the like.

Unfortunately, I don't see a good way to apply either of these models to this system. Sending video over broadband internet will take the same amount of time for an "original" as for a copy, and you can't send collectable items down the wires!

Analogue quality loss is really a non-issue -- at least, not so much of an issue as it ever was in the days of walkman cassettes. If you take the best digital copy you can from an analogue output, it isn't going to get any worse because all future copies will be made digitally, and hence every bit as good as the "original". The only critical stage is making that first, digital copy.

For the record, my own experiments show that EP mode {4 hours on a single-layer DVD+RW} is barely distinguible from digital broadcast on a 51cm. TV and EP+ {6 hours} is still tolerable. Even an analogue copy -- made from a cheap portable player with no RGB output, just composite video via a 3.5mm jack plug and a metre of cable of a grade I wouldn't use for speech -- is fine in EP.

Netflix announcement from June 15th

Netflix is successful mostly because they have over 40,000 titles on tap. That's more than Blockbuster. Their queueing system allows you to add a movie to your rental queue when you hear about it ... instead of wandering into the store, wondering what's good, and trying to remember what your friend mentioned 4 weeks ago. Oh: and you get to browse reviews by other people who have watched the movie. They have over a million movie reviews from customers in their database!

How often have you picked up a box in Blockbuster and thought, "Hmph. Pretty pictures. I wonder if it's any good?"

Anyway, Netflix recently announced (http://ir.netflix.com/ [netflix.com], listen to Webcast "Morgan Stanley Small Cap Conference") that they no longer felt download was a viable approach in the short term, and they were investing their time in other directions.

As mentioned elsewhere here, DRM is a big issue with downloads. Yes, you can rip DVDs, but it's the STUDIO EXECS that you have to convince about the "safety" of downloading. If they won't sign on for letting their movies be downloaded from Netflix, then it's not gonna happen. End of story.

...woo

While I do think that it is not such a problem for people to go out and rent movies, where I live there are very few poorly stocked movie rental stores and they don't carry the type of movies I enjoy watching. With an online movie store my selection widens greatly.

Good strategy

It's a very good strategy to 'accidentally' leak some info before launch of a new product/service.
It creates attention and if you're lucky... hype.

It's only a matter of time...

I think with the advent of internet-ready televisions and faster bandwith to the home like FIOS, and something like this is only inevitable. Netflix is positioning itself to reap the benefits of the next step when home entertainment begins to converge.

In the future, video on demand will be instant, go straight to your tv, and you'll be able to create a DVD copy that's yours to keep as if you bought it from a store. I think it will also eventually be done at the same time with new theatrical releases. The same amount of profit from later rentals and purchases could be made at the time of release, so why not allow home users to purchase/download for the price of a ticket? This would essentially kill the video store market, but likely it will happen as technology moves forward.

NotNetFlix.com

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I prefer what these guys offer: NotNetFlix.com [notnetflix.com]

Netflix + Windows Media Center?

I wonder if there'll be support for Windows Media Center Edition? That would be awesome!

The July 9-15 Economist

No surprise herre, the 7/9-7/15 issue of The Economist has an article on Reed Hastings and his effort to launch a new service for downloading movies.

Xbox 360 and PS3

Hopefully, they make it compatible with the PS3 and Xbox 360. I already have a dvr from my cable company, and I'm not going to get a tivo.

-1, Redundant????

Redundant, are you serious? It was posted ONE MINUTE after another similar post. WTF am I supposed to do?