Netflix seems to be getting closer to its dream of converting its customer base across from online DVD rental to online delivery, and at a briefing this week Netflix told investors that it plans to introduce a wi-fi device that will connect its online film service straight to a TV set, without going through a PC.
Netflix has been working on an online film service since 2005 and has always maintained that online delivery will take over very slowly from physical DVD rental, and that it has no intentions of hurrying.
Advanced TV this week reported Netflix chief financial officer Barry McCarthy saying that some type of device will be needed to deliver movies to the TV and that he didn’t think a PC would be the consumers choice.
He also pointed out that the Netflix service is entirely streamed and that this meant there was no need to go head to head with Apple and its Apple TV product, which has to include a hard disk drive.
The move was pretty obvious when back in April, Netflix added Anthony Wood to its payroll, in the newly created position of VP Internet TV. Wood previously founded Replay TV, an early rival to TiVo in the DVR market, a move which widely led to analyst speculating that Netflix would introduce a direct to TV product shortly.
He said at the time, “Netflix has taken the first step, and an innovative one, in offering online video to its members, and I’m here to work with a range of partners to get that video to the television, where consumers watch most of their movies.”
Netflix launched its online service in January, to watch movies and TV services on Internet connected PCs in real-time. As part of the introduction, the company said that over time it would focus on expanding its selection of instantly viewable content and work to bring the feature to all Internet-connected screens, which would include cell phones, PCs and flat TV screens.
Co-incidentally this week ABI Research has issued a forecasts saying that such devices, which link internet content to the TV will generate $1.5 billion in service revenue by 2012.
We have to say that this market is far too immature to measure and that we would be extremely surprised if the figure was that low, and intuitively, at the rate at which broadcasters are taking services onto the internet, this is more likely to be a figure of ten times that.
The report points out that 12% of internet users have purchased some form of online video content and finds that 71% of them watched this video on their PCs, and only 16% watched it on a TV set using a burned DVD, while 8% watched it using an electronic game console.
Meanwhile, in an unrelated announcement, Netflix has been hit with a class action lawsuit claiming that it has violated antitrust law by deliberately hiding prior art related to patents it then filed and later used to sue DVD rental rival Blockbuster.