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Netflix Insists It Hasn't Finalized Movie-Downloading Plans

By Reuters
Published | Updated

LOS ANGELES – Online DVD rental company Netflix Inc (NFLX) on Tuesday said it is considering a broad range of options as part of its strategy to allow subscribers to download movies from the Internet.

In a regulatory filing, the company said it was clarifying remarks made at a media conference on Friday by Eric Besner, its vice president of original programming, who said Netflix was developing a proprietary set-top box that would let subscribers download movies to watch on their television sets.

The comments, which were reported in the trade publication Variety on Sunday, have been interpreted to suggest that the company has narrowed its downloading strategy to a set-top box product, Netflix said in the filing.

Netflix said no decisions have been made regarding specific delivery options or timing, but a spokesman said on Monday that a proprietary set-top box was one of the options under consideration.

Netflix said it is investing $5 million to $10 million this year in downloading technology, and planned to discuss its plans for an online download service for its nearly 5 million subscribers during its fourth-quarter earnings announcement in January of 2007.

Last year, Netflix scrapped plans to launch a limited online download service because of problems acquiring content licensing rights that are tied up in exclusive television agreements.

The company has said it plans to increase its subscriber base to 20 million by 2012 to position itself to be a leader in online movie downloads.

Netflix is one of several companies working to bring a wide selection of movie downloads to consumers' television sets from their computer screens.

Apple Computer Inc. (AAPL) reportedly is in talks with Hollywood studios to offer movie downloads on its popular online iTunes Music Store.

The major studios also have begun offering some movies for sale and rental through the Web-based services Movielink and CinemaNow.

Movielink is a joint venture of Metro-Goldwyn-Mayer Studios, Paramount Pictures, Sony Pictures Entertainment, Universal Studios and Warner Bros. Studios.

CinemaNow is owned by Microsoft Corp (MSFT), Lionsgate Entertainment Corp (LGF), Cisco Systems (CSCO), Blockbuster Inc (BBI) and others.

Shares of Netflix closed down about 9 cents at $27.08 on Tuesday on Nasdaq. Its shares were down another 8 cents in after-hours trade on Inet on Tuesday.