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Monday, January 14, 2008

NetFlix Offers Unlimited Video Streaming

NetFlix is living up to its name by now offering unlimited viewing of TV and movie content on PCs. But without an advertising strategy to pay for it, this defensive move could thrash the company's bottom line.

People love the thought of subscription services for video, hence NetFlix popularity. Why anyone cotinues to pay $4 a pop for a movie rental when you pay less than $20 to watch a dozen or more movies a month is beyond me.

Because most folks still (and will always) prefer watching movies on TVs, the use of NetFlix' service that lets people an unlimited amount of 6,000 titles probably won't be huge, but it could be enough to hinder the company's profitability. NetFlix has fallen into the same trap as Blockbuster, which tanked after it ended late fees and gave consumers free in-store rentals with its onine service.

What NetFlix, Blockbuster, Apple, and Comcast need is a marketing strategy that generates some revenue from the shift to all-you-watch content. Through ads at the beginning of the video or sponsorship (this free viewing of the Office is brought to you by GM), they need to make something from each viewing. Or, they could earn commissions by pushiing set-top or wireless boxes that simplify watching movies on TV.

I just can't see how offering unlimited movies for $17 a month can keep these companies in the black. While $4 a movie may be too much, subscription services are likely too little, so ads are a necessary part of the picture.

By John Gartner at 08:40 AM | Comments (0)

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