Netflix Mulls Movie Download Service

Responding to a report in Variety, Netflix late Tuesday acknowledged that it was exploring the idea of allowing users to download movies over the Internet, but said it had no firm plans. The explanation came in a regulatory filing intended to clarify remarks made on Friday.

At the Independent Film and Television Alliance production conference on Friday, Netflix vice president of original programming Eric Besner commented that the company was developing a set-top box that could be used for digital downloading. Netflix has long said movie downloads was part of its future plans.

Variety reported the news on Sunday, claiming that Netflix had settled on a set-top box to deliver downloads to customers. But the company says this is inaccurate, and it has made no decisions on how it will roll out such a service. Netflix officials say a set-top box is only one of the possibilities.

MovieBeam currently offers a similar service that utilizes a hardware device to access movies, but it receives the content over the air with an antenna rather than the Internet.

Netflix says it is investing between $5 million and $10 million on a downloading initiative, just as it did last year, but any other remarks on the service were "premature."

Although companies like CinemaNow and Movielink are making progress in the movie download market, a number of hurdles remain. Movie studios are hesitant to hand over licensing rights for Internet distribution to third parties, and fears that digital rights management can be bypassed are still prevalent.

Apple is busy negotiating with the major Hollywood studios to bring movie downloads to its iTunes store, according to reports, but the company is facing much resistance. Apple, like Netflix, would like to establish flat fees for movie downloads like it has done for music, but the studios want variable pricing based on the popularity and age of a film.

Netflix says it will provide more details about its planned download service in January 2007 during its fourth quarter earnings announcement.

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