Netflix, preparing for the eventual end of its DVD-by-mail rental service, introduced today the Netflix Player by Roku, a device that enables Netflix subscribers to instantly stream a growing library of movies and TV episodes from Netflix directly to the TV.
Priced at $99.99, the 5-inch by 5-inch player is available for purchase starting today at www.roku.com/netflixplayer. The player is simple to install, easy to use and gives Netflix members instant access to more than 10,000 movies and TV episodes.
The streaming service will be provided at no extra cost to most of Netflix's 8.2 million subscribers, but it has limited appeal so far because it doesn't include the latest movies and couldn't easily be watched on anything but a personal computer, per the ASSOCIATED PRESS.
"We think this is something that offers a big value at a low cost," said Reed Hastings, Netflix's chief executive officer, to AP.
Similar Internet-to-TV devices from Apple and Vudu cost $229 to $295. The Netflix Player is one of the first of several devices that will pipe Netflix's streaming service to TV sets.
LG Electronics is expected to include the streaming capability in a Blu-ray DVD player it plans to debut later this year. And, without providing further details to the AP, Netflix has said two other major consumer electronics companies are working on set-top boxes for its streaming service.
Hastings is confident that the demand for DVD rentals will remain strong for a least a few more years, partly because major studios aren't ready to fully embrace digital distribution. However, the day will come when it will be easier for everyone to simply rent and buy movies in a few minutes over the Internet rather than waiting for them to be delivered by mail.
Hastings is preparing for that day by pouring more than $40 million into its streaming service, called "Watch Instantly," and is trying to encourage its subscribers to use it even though it doesn't generate more revenue. If anything, it diminishes the company's bottom line because the licensing fees are based on how frequently subscribers use it. And any customer who pays at least $8.99 a month for the DVD rental plan gets unlimited access to the streaming service.
Netflix has projected a 20 percent increase in profit this year, as much as $83 million, and lifting Netflix's market value 16 percent so far this year. Hastings eventually hopes to recoup some of this added expense by having to spend less money to attract and retain customers as more people enjoy the convenience of the streaming service. There are no plans to change the streaming service fee this year.
Netflix offers more than 100,000 movies and TV shows on DVD, about 10 times the streaming service's selection, a major shortcoming as nearly one-third of the rental requests on Netflix's DVD service are for new movie releases, according to Cowen and Co. analyst James Friedland.