“Netflix Inc. will start showing movies and TV episodes over the Internet this week, providing its subscribers with more instant gratification as the DVD-by-mail service prepares for a looming technology shift threatening its survival,” Michael Liedtke reports for The Associated Press.

“The Los Gatos-based company plans to unveil the new ‘Watch Now’ feature Tuesday, but only a small number of its more than 6 million subscribers will get immediate access to the service, which is being offered at no additional charge,” Liedtke reports. “Netflix expects to introduce the instant viewing system to about 250,000 more subscribers each week through June to ensure its computers can cope with the increased demand.”

“After accepting a computer applet that takes less than a minute to install, subscribers will be able to watch anywhere from six hours to 48 hours of material per month on an Internet streaming service that is supposed to prevent piracy,” Liedtke reports. “The allotted viewing time will be tied to how much customers already pay for their DVD rentals. Under Netflix’s most popular $17.99 monthly package, subscribers will receive 18 hours of Internet viewing time.”

Liedtke reports, “The company has budgeted about $40 million this year to expand its data centers and cover the licensing fees for the roughly 1,000 movies and TV shows that will be initially available for online delivery. Netflix’s DVD library, by comparison, spans more than 70,000 titles, one of the main reasons why the mail is expected to remain the preferred delivery option for most subscribers.”

Liedtke reports, “Another major drawback: the instant viewing system only works on personal computers and laptops equipped with a high-speed Internet connection and Microsoft Corp.’s Windows operating system. That means the movies can’t be watched on cell phones, TVs or video iPods, let alone computers that run on Apple Inc.’s operating system.”

“Online movie delivery already is available through services like CinemaNow, MovieFlix, Movielink, Vongo and Amazon.com Inc.’s recently launched Unbox. Apple Inc. also is emerging as major player, with hundreds of movies and TV shows on sale at its iTunes store and a new device that promises to transport media from a computer to a TV screen,” Liedtke reports.

Full article here.
Imagining a more limited service would be quite difficult.