Online DVD company Netflix claims one million Microsoft Xbox 360 video game console users have activated Netflix’s movie streaming service in the past three months since the two companies formed a partnership.

Is that a lot? They watched. it is claimed, 1.5 billion minutes of movies and TV episodes. Let us may an episode 25 minutes long. Which makes 500 million downloads. But Netflix said though these downloads had been made through its Watch Instantly video service it did not say how many subscribers it has actually gained from the partnership.

Netflix, best known in the United States for renting DVDs by mail, is the only company offering a subscription-based streaming video service. The others Amazon.com, Apple, and Blockbuster have a la carte, pay-per-view rentals. Difficult to take a firm position on this.

Let us take Law and Order. How do you tell which one you want to watch? You go on the Internet and do a search. Decide you have not seen that or want to see it again and pay for a download. But would you pay a subscription service so that you could watch any or all of them?

Everyone wants to know. They want to know if there is a serious market for selling movies over the Internet now that some traditional media companies like Walt Disney are reporting declining DVD sales. Disney thinks the system needs revision and that is probably true.

Last month Netflix said its stronger-than-expected quarterly results were propelled by growth in its Web video streaming service. Netflix has offered the Watch Instantly streaming service for over two years although it was was originally only available on PCs. It has since offered streaming Netflix video from the Internet through various devices, including the Roku settop boxes, the Xbox, LG Electronics products and others.

There is a massive difference. In one you are in a real television experience. In the other you are watching TV on the Internet and there is no comparison. It has nothing to do with quality — of course, that comes into it — but the whole experience.

You are sitting on a sofa or an easy chair. The screen is some way away. It is very large and possibly slim line LCD. You are watching television, a movie. Not watching something on the Internet. There is a massive difference even if the method of delivery is the same.

The Netflix application offers Xbox LIVE Gold members, who pay $50 (US dollars) a year to Microsoft for various different applications, the ability to instantly view content from Netflix on a TV via the Xbox 360 system if they are also members of Netflix service, priced at around $9 per month to include Watch Instantly unlimited streaming.

Did you follow all of that?

OK, you are looking at $60 a month. Too expensive for many. Rupert Murdoch worries about it all the time. Pretty much incessantly. There is a price where the viewers will simply not go. No one knows what that price is.

Netflix’s library of about 12,000 titles for instant viewing includes mostly older Hollywood titles as major movie studios have resisted making new releases available digitally for subscription services. So, yes, you can watch ‘Seven Brides for Seven Brothers’ but that may not make your hormones jangle. But if they put on a very recent release there will be an instant and nasty reaction from theater owners as a start. The rules are pretty simple. 80 percent of all views are of movies made in the last few months. And therein lies the problem. OK,. you can make up the money with advertising but will the punters stand still for it? Probably not.

Netflix offers newer titles on DVD or high-definition Blu-ray Disc through its mail-order service, through a library of more than 100,000 titles. This does not work as well as Netflix would wish — and often claims — and it is an interim service. The real thing will be instant streaming. And no one know what the public is willing to pay.

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Entry was posted on Sunday, February 8th, 2009 at 7:22 pm under Online video.

Read more entries by Gareth Powell.
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