Streaming Movies—from Netflix

The king of snail-mail DVDs now offers a promising films-by-Internet service, but it has issues
Peter Arkle

Since this column was written, Netflix has made significant changes to its Web site to make it easier to find movies that can be streamed. See my TechBeat blog post for details.

Bit by bit, the vast library of movies and TV shows available on DVD is making its way online. It's out there on the servers. We know where it lives. So why can't we get it onto those expensive big-screen TVs we talked ourselves into buying? Netflix (NFLX) , the king of snail-mail DVDs, may be the company that finally makes it happen.

You may not realize this, but if you have a Netflix account, you already have the ability to stream movies to a Windows PC at no additional charge. That service has been available since the start of the year for any subscriber paying the minimum $9 monthly fee for an unlimited account. Now, if you are willing to spend $100 on a gizmo called the Roku Netflix Player, you can watch those same movies on a TV with no fuss and no charge other than the hardware purchase.

The Netflix service is far from perfect, but it is likely to get better with time. And even with its flaws, Net­flix's all-you-can-watch subscription model is sweet, especially when you consider the alternatives—namely, purchasing a movie download for up to $18 or paying $4 or so for a one-day rental from Movielink, iTunes, or a cable on-demand service.

The Roku is a small box that superficially resembles products such as Apple TV (AAPL) or Vudu. But while the setup is similar, the operation is completely different. Other services download the content to a hard drive for playback; Netflix is pure streaming.

Content Selection: Not User-Friendly

The quality is not as good as Apple TV or Vudu, but it's about equal to standard-definition digital TV. Making it work smoothly requires an Internet connection that consistently delivers at least 2 megabits per second. No content is saved on the player, but if you stop watching partway through a film, the service will restart where you left off. There's also a sort-of fast-forward and rewind that shows you thumbnail images as you skip forward or back. But it can take a minute or so for the show to resume.

While the selection of films available for download is better than on most services, it's still only about 8% of the 100,000 titles in Netflix's DVD catalog, and not the best 8%. In this, Netflix, like everyone else, is at the mercy of studios' whims.

The method of selecting content leaves a lot to be desired. You start at In a process very similar to choosing the disks you want Netflix to mail you, you find movies or TV shows and add them to your "instant queue." When you go back to your TV, your choices will be available for streaming.

That all sounds fine. Except you won't know if your selected film is one of those able to be streamed until you go through this rigmarole, then check to see if the word "instant" appears in the list of available formats. The only alternative is to page methodically through the complete list of instant titles that are available for streaming. Netflix's otherwise exemplary "Movies Youll Love" feature is unusable, because there's no indication of whether the suggestions can be streamed, and even clicking on a title to display details doesn't always tell you whether that show or movie is "instant" or not.

Tips for Netflix

To achieve online success, Netflix must increase the number and quality of titles and make it easy to find the content people want. And there's another familiar problem, which may soon get solved. Right now, the Roku box adds yet another unit to your video setup. But later this year, LG Electronics plans to introduce a multi­purpose set-top box that includes the Netflix service. (Netflix originally planned to put its brand right on the box, but wisely decided it didn't belong in the hardware business.)

These faults are serious, but they can be fixed. My advice: Netflix should begin by repairing the awful search feature for online content. That shouldn't be hard. For most users, the subscription idea will be so compelling that they'll be patient while Netflix gets rid of the warts.

    Before it's here, it's on the Bloomberg Terminal.