A $99, No-Frills Player from Netflix

(page 2 of 2)

Changing the Paradigm

Once you hit the play button, it takes just 20-30 seconds for the title to begin streaming. You can't store the films to a hard drive, but the box has built-in memory to cache enough content so that the video stream remains stutter-free. I cut off the box's Web connection by removing the Ethernet cable and the video continued to run for just over two minutes before cutting off.

My sudden embrace of Netflix's instant movie service with this device is all the more remarkable when you consider that I have never once downloaded a Netflix video to watch on a computer since the company introduced that capability in early 2007. My office firewall blocks playback, and I've never had much hankering to watch a movie on a computer screen at home when there's a TV so readily available. What's more, the Netflix download library of slightly more than 8,000 titles seemed woefully inadequate when weighed against the inconvenience of watching them on a small PC screen.

But the paradigm changes with the addition of the big screen. Over a lazy Memorial Day weekend, the Netflix Player and this seemingly limited selection actually became a plus. Many of the older titles on my list of requests for DVD rentals by mail had been buried at the bottom for some time, always pushed lower as I added newer releases to the top of my preferences. But now I found that many of these older titles had become available for streaming. I moved those videos, including episodes of The Munsters and the British version of The Office, into the Instant Watch queue and zipped through a number of them.

Stopping a Stinker in Midstream

I also added movies that I'd been on the bubble about, including Before the Devil Knows You're Dead. Since you can only have a certain number of DVDs at a time, and it takes two or three days for new ones to arrive, I worried that such titles may not have been worth that "investment." But with instant streaming, you can stop a stinker and move on to another choice in seconds without limit or extra fees.

That's a key advantage over rival services such as Apple TV, Amazon (AMZN) Unbox (through TiVo), and Vudu, which demand up-front payment of $3.99 to $4.99 a title—and limit the time window you have to watch a movie once you download it. Another nifty feature available while searching Netflix for instant movies on your computer is the ability to search through the top 25 downloads overall and the top 50 in different genres.

With the Netflix Player, you can't actually purchase a movie. But I'd wager that many people would be perfectly happy most of the time with a single viewing. You can always download a video again.

Good News For Couch Potatoes

It would certainly enhance the service if Netflix dramatically increased the stock of movies available for streaming. And the company would knock one out of the ballpark if it could get studios to offer new releases for download, though the economics of this proposition make such a move unlikely in the short term.

Even so, the company's hybrid of mail-order and download rentals—delivered at relatively low cost and easy to use—sets a new standard for the industry. It will force competitors to reexamine the much-maligned subscription model and spur a new round of innovation in the marketplace. Already, Netflix is working to build the technology directly into big-screen televisions, and it plans to offer HD-video downloads soon. That's good news indeed for couch potatoes.

Edwards is a correspondent in BusinessWeek's Silicon Valley bureau.