Netflix To Offer Streaming-Only Subscription Service In The US

You knew this was coming. After a trial offer of streaming-only services in Canada, a third-quarter earnings conference call with Netflix CEo Reed Hastings revealed the company's plan to offer a lower-cost subscription plan that would offer customers access to films and TV shows via only the company's streaming service.

There's no price now, but the Canadian service runs $7.99, and the LA Times says the price is likely to be the same when the option is activated in the US. There is no plan to change streaming access for other subscription plans, so all plans that currently offer unlimited streaming will continue to do so.

Mr. Hastings said,

By every measure we are now primarily a streaming company that also offers DVD-by-mail... DVD-by-mail shipments are still growing, but streaming for us is much larger and growing much faster.

This comes as a compliment to another LA Times piece that talks about how studios bungled the transition to digital film sales, and in the process diminished their own revenue stream by creating an economy in which it was easier for customers to digitally stream or rent movies rather than buy them.

DVD sales have fallen from a $20B high in 2006 as customers have borrowed discs from Blockbuster and Netflix and streamed movies online in those ever-increasing numbers referred to by Mr. Hastings. Labyrinthine and outdated rights deals complicated the process of selling movies in digital format, making the process seem more complicated than necessary, and pushing customers away.

And, the paper says, just as Netflix's streaming service is seeing incredible growth, so too are digital film rentals:

U.S. consumers will rent 37.7 million movies online this year for $3 to $5 each.... That's a nearly sevenfold increase from 2007, and it doesn't include the more than 300 million estimated videos streamed via Netflix's subscription rental service. Meanwhile, consumers will buy about 20 million movies this year for $10 to $15, a less than threefold increase since 2007.

I'll digitally rent movies from Amazon and other sources without a thought, and now that Netflix is launching native apps for streaming films on the PS3 and Wii, there won't be a media device in my home that can't stream a film from the service. (Between those, a 360, my computer, and a Netflix-enabled blu-ray player, houses such as mine are incredibly Netflix-redundant of late.) Why pay more for a rights-controlled digital copy that I can own? There's simply no need. Is it too late to make digital sales seem attractive? Without a significant drop in price, very possibly so.