Netflix disrupts Apple's and Microsoft's TV strategies

Ian Lamont — Tue, 20 May 2008 07:15:24 -0700

Netflix has announced "The Netflix Player by Roku," an inexpensive set-top box that streams movies from the Internet to viewers' TV sets (product shots and specs here). It costs just $100 on the Roku website, and displays the items in viewers' Netflix queues for instant viewing. It requires an Ethernet or wireless connection. There is no extra charge for using the service, as long as you have a Netflix subscription with unlimited DVDs, which is what most Netflix members already have (such as my family's two DVDs-at-a-time plan).

Digging deeper into the FAQ, it seems that the player is HD-capable, but Netflix has yet to support streaming HD content over the service ("When Netflix releases HD content for Instant Watching, the Netflix Player by Roku will be ready.")

It sounds like a good deal, and it's quite obvious which product is most threatened by the Netflix Player by Roku: Apple TV. The press release quotes Netflix CEO Reed Hastings saying the Roku's queue-based model is "a major improvement versus the clutter of trying to choose from 10,000 films on the TV," a not-so-subtle swipe at the Apple TV/iTunes pairing. The Netflix player also handily beats Apple TV on price -- the latter costs more than $200, movies are charged on a per-title basis ($3 to $4 for standard definition titles) and they have to be watched within 24 hours once play has started. Apple TV does offer HD titles, but they are more expensive -- $5 a pop.

DVDs are so 1990s, and observers have been predicting Netflix's demise for years. However, the partnership with Roku shows that the company has made some solid plans for the future, and is a force to be reckoned with as the industry and viewers make the transition from physical media to the Internet. Netflix has already shown itself to be a savvy and important player in the entertainment industry, and now it is disrupting an online market which Microsoft, Apple, and others want to control. The Industry Standard prediction about Microsoft acquiring Netflix by the end of next month may be a bit premature, but it's not out of the question.

More news, commentary, and predictions from The Industry Standard:

Prediction: Microsoft proposes acquisition of Netflix by June 30th
Prediction: Netflix's online collection viewable on Xbox 360 by year's end
Analysis: The real reason Microsoft won't bring Blu-ray to the Xbox: HDi
Analysis: Challenges for Netflix 2.0
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Netflix disrupts Apple's and Microsoft's TV strategies