Netflix "Watch Now" and the Future of Online Movies

With the advent of their mail-order rental business, Netflix changed the DVD industry and forced the king of rentals, Blockbuster, to play catch-up for the first time since it achieved national dominance in the 1980s. It wasn't long before Netflix upped the ante once more by targeting subscribers with high-bandwidth Internet connections with their "Watch Now" service. This service puts a limited selection (currently there are about 2,000 movies) of films online for instant viewing through the Web site's media player. These movies take anywhere from thirty minutes to thirty seconds to download, depending on your connection speed. The implications for the future of movie rentals are unclear, but there will be repercussions.

Although the majority of the movie renting public still likes the feel of a tangible DVD, there is an increasing demand for online downloading. It's not just for the pirates and shaky-cam enthusiasts anymore. With higher quality computer monitors, and the proliferation of portable internet devices such as the iPhone, any service that allows the user to watch content online is going to turn heads. While Netflix has not populated their library with enough quality titles to truly revolutionize anything yet, that time may not be far in the future. They are adding titles on a weekly basis, though admittedly many of these titles (The Bride and the Beast and G-Men From Hell, for example) aren't likely to turn heads in any great numbers. On the other hand, they do have a selection of rather enticing films, including Pan's Labyrinth and The Matrix.

Once again, Blockbuster found itself playing catch-up. This time, rather than create a system of downloadable movies themselves, they decided to purchase failing startup Movielink.com, a website with capital backing from Warner Bros, MGM, Sony, Paramount, and Universal. As of this time, Blockbuster has made no ostensible changes to the Web site, and seems to be operating it as a distinct separate entity from its own Blockbuster.com. Visitors to Movielink have the option of paying a rental fee to download a movie for 24 hours, or pay the purchase price to download the film and store it on their hard drives forever (they will still not be allowed to burn the film to DVD). This system has not proved popular with web surfers. Movielink's rental fees are comparable with the fees of renting from a brick and mortar video store (from 99 cents to $4.99), and their purchase prices are comparable with what you would pay for the actual DVD (consider $19.99 for the download of 300). While the film selection is (currently) of higher quality than that of Netflix's Watch Now Program, Blockbuster will likely have to make some changes if they want the Movielink system to work.

There is another force driving the demand for online downloading and viewing. This is the increasing popularity of digital home projectors. These projectors can be hooked up to a PC, turning one's monitor into an instant 100" screen. With this technology coupled with the ease of internet watching, one can see where the future may lie. Waiting for rentals to come by mail could easily become passe in this era when consumers want their entertainment yesterday.

For now, the advent of Netflix's Watch Now program and other programs like it are but a tiny blip on a landscape of more traditional movie sources. However, it is the nature of today's technology that these things take less and less time to become entrenched in the culture. We may not know today what direction the movie rental business will take, but a year from now, everything may be clear. Will it be downloadable movies, or something completely fresh and out of left field? We can only wait and see.