Netflix Makes Huge Online Streaming Move

There was a time when I understood why people would choose Blockbuster over Netflix: you could still get movies via mail, but deliver them to a brick-and-mortar store and retrieve a new movie instantaneously. Well, almost instantaneously, if you consider driving to the store, waiting in line, and driving home such a thing. It’s now 2010, and after Netflix’s latest business move, it’s hard to imagine anyone not subscribing to the big red.

Netflix has reportedly signed a deal – or is close to doing so – with Epix, a struggling company that directly represents Paramount, Lionsgate and MGM. Variety reports the deal would bring Epix movies to Netflix’s instant streaming service; in other words, 46% of the major movies produced will now be available on demand via Netflix’s website, a vast improvement over the studio’s already impressive collection. Considering that most of Netflix’s 15 million subscribers have unlimited access to its streaming functionality already (it costs at minimum $8.99 a month), this is yet another major victory for the innovative company and its users.

Netflix will pay approximately $1 billion in licensing fees, and Epix will become instantly profitable. More importantly, the service will gear up on September 1, 2010 with titles premiering 90 days after their premium pay TV and cable on demand debuts.

According to the San Francisco Chronicle,  61% of Netflix’s subscribers have watched at least one movie or TV streamed over the Internet, and online viewing has increased 37 percent from the previous year. Those are significant numbers, and ones surely to increase as consumers gradually switch to Blu-Ray players that typically come with Netflix access. The shifting business model of the major studios indicate that they are now taking Internet viewing seriously, and, frankly, means that the death of movies-by-disc has accelerated.

That’s good news for Netflix – its $600 million shipping costs last year are expected to rise to $700 million with increased postage fees – and not-so-good news for Blockbuster, which continues to rely on brick-and-mortar stores. It will also be interesting to see if Redbox can persist beyond a fad; what’s popular now may not be so much in a couple years’ time, when most new movies are available at a click of a remote.

By Erik Samdahl
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