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Netflix Streams Content to the TV

20 May, 2008 By: Erik Gruenwedel

Online DVD rental pioneer Netflix Inc. May 20 introduced a small dictionary-sized set-top box that allows its 8.2 million subscribers to stream movies and television shows from the Internet to the TV.

Manufactured by Roku, Inc., a Saratoga, Calif.-based software and hardware company, “The Netflix Player by Roku” retails for $99.99 — less than half the price of Apple TV and Vudu Box — and is available at www.roku.com.

The device allows for both land and wireless connections to the Internet.

“Now, streaming video isn't limited to people sitting in front of the PC; it's ready for the TV in the living room,” said Anthony Wood, founder and CEO of Roku.

Los Gatos, Calif.-based Netflix's portfolio contains more than 10,000 movies and TV shows (largely catalog), in addition to 100,000 new and catalog DVD titles.

The company has spent more than $40 million launching its “Watch Instantly” streaming service as an added feature for monthly subscribers.

Richard Doherty, analyst with The Envisioneering Group in New York, said Netflix scored a touchdown with the player, which he said also features Dolby audio and HDMI connectivity.

“Simplicity and price are the key,” Doherty said.

The analyst said installation of a sample took seconds and he was able to watch seasons of his favorite show, “Sliders,” without a hitch. He said consumers could buy multiple boxes and not incur additional subscription fees.

“You could take it with you to a hotel,” Doherty said. “My cable company charges me this much in six months.”

Netflix chairman and CEO Reed Hastings has made no secret his desire to incorporate the company's streaming technology into 100 entertainment devices.

In January, Netflix announced it had partnered with LG Electronics to include its streaming service in a pending set-top box due later this year. Reports now say that device will be a Blu-ray Disc player.

Rob Enderle with Enderle Group in San Jose, Calif., said Netlfix has recognized that the market is eventually moving toward downloads and if it doesn't move aggressively, its business model “is toast.”

“It's very nice to justify as a cable alternative,” Enderle said.

Regardless, in the quickly evolving entertainment distribution channel, content as much as price remains key, according Edward Woo, analyst with Wedbush Morgan Securities in Los Angeles.

He said his initial reaction was that the player was another Moviebeam without the extra fees. Upon closer inspection, Woo said the device is a step in the right direction provided Netflix can upgrade its digital offerings.

“I'll have to wait to see if they can greatly expand movie offerings to new releases and if the picture quality is good,” Woo said.

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