Netflix Revolutionizing the Way Millions of People Watch Television

Fascinating piece, at NYT, "Netflix’s Move Onto the Web Stirs Rivalries."

In a matter of months, the movie delivery company Netflix has gone from being the fastest-growing first-class mail customer of the United States Postal Service to the biggest source of streaming Web traffic in North America during peak evening hours.

That transformation — from a mail-order business to a technology company — is revolutionizing the way millions of people watch television, but it’s also proving to be a big headache for TV providers and movie studios, which increasingly see Netflix as a competitive threat, even as they sell Netflix their content.

The dilemma for Hollywood was neatly spelled out in a Netflix announcement Monday of a new subscription service: $7.99 a month for unlimited downloads of movies and television shows, compared with $19.99 a month for a plan that allows the subscriber to have three discs out at a time, sent through the mail, plus unlimited downloads. For studios that only a few years ago were selling new DVDs for $30, that represents a huge drop in profits.

“Right now, Netflix is a distribution platform, and has very little competition, but that’s changing,” said Warren N. Lieberfarb, a consultant who played a critical role in creating the DVD while at Warner Brothers.

RTWT.