Blockbuster + Sonic does not = Netflix
After having competed throughout the infancy of the downloadable movie market, Movielink (now Blockbuster OnDemand) and CinemaNow (now part of Sonic Solutions) are finally joining forces, kinda sorta. The alliance announced today (and reported by my colleague Dawn Chmielewski yesterday) will let Blockbuster deliver downloadable movies to far more portable devices, set-top boxes and TV sets. That's because CinemaNow has been busily striking deals to embed its software in consumer electronics and mobile devices. The CinemaNow platform also takes a less straitjacketed approach to DRM, enabling customers to view movies on multiple devices. Sonic, in return, gets the nontrivial benefit of the Blockbuster brand, plus some of the exclusive content Blockbuster has (e.g., movies from Independent Film Channel). The result should be a more able competitor to the online movie rental services offered by Amazon and Apple -- but not to Netflix, despite numerous news accounts to the contrary.
That's because Netflix's offering is a different breed of cat. Subscribers to Netflix's standard movies-by-mail service can, for no additional fee, watch an unlimited number of movies and TV shows that are streamed to them online. The no-incremental-cost approach is incredibly appealing, especially for avid movie watchers. IMHO, the Netflix business model (new movies by mail, older titles by stream, all for one monthly fee) will hold a significant advantage as long as the streaming or downloading option isn't the preferred route to watching a movie at home. And I think DVDs will remain the preferred route until streamed or downloaded flicks look as good and are as easy to use as movies on discs.
The main trade-off with the Netflix service is that the movies aren't new releases -- the studios make titles available for Netflix's streaming service in the same "window" used for cable TV's premium movie channels. That means they're weeks, and sometimes months, older than the ones newly available on DVD and in video-on-demand services (including Blockbuster OnDemand and CinemaNow). The subscription movie window is temporary, too, meaning that titles drop out as they get older. The result is that Netflix offers a much smaller library of streamable movies and TV shows than it makes available by mail. Another shortcoming for Netflix is the shortage of set-top boxes and TV sets that support its service, especially when compared to CinemaNow. But plenty of box and TV makers are looking to support for the Netflix streams to their devices, so that gap could soon start to close.
-- Jon Healey