Netflix tip-toes into online video streaming

The Wall Street Journal, Variety, and the NY Times have stories about Netflix's new streaming video service. (Here's some earlier CinemaTech coverage on Netflix's strategy.)

The key facts about Netflix's new "Watch Now" feature:

- It's free to subscribers. Based on your subscription plan, you get anywhere from 6 to 48 hours of free streaming a month.
- Videos are in streaming format only. You can't store them on your computer for later viewing, and you can't burn them to a DVD.
- It'll be available to a small subset of Netflix customers at first - about 250,000 will get access each week, to ensure the technology can handle demand.
- It's launching today with 1000 movies and TV shows. Disney isn't participating yet, but the other major studios are.

That's a less appealing feature set than services like CinemaNow, Movielink, iTunes, Vongo and Amazon Unbox offer. I'm not sure how this is compelling, except as a stop-gap measure when you've just sent back your Netflix movies in the mail, and are waiting for more. That makes it more of a defensive move -- a way to keep customers happy, and prevent them from signing up for other download services. Also: I wonder whether Netflix users will use this mostly to sample movies before they add them to their queue.

But what this tells me about Netflix's digital strategy is that they don't want to be a pay-per-download player (like CinemaNow or iTunes); rather, they would like to keep growing their base of customers who pay a monthly subscription, and simply offer them an array of either physicial DVD rental or digital options.