Netflix ups the ante on Apple

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It's not easy to divert attention from Apple on the eve of Macworld, but give Netflix points for trying.

The company that turned DVDs into a subscription service for millions of consumers said Monday that it no longer will put a cap on the number of hours its customers can view movies and TV shows over the Internet.

The move by Netflix came a day before Apple CEO Steve Jobs was set to reveal details of its new iTunes service that will let users rent videos -- not just purchase them -- via online download.

Jobs is scheduled to deliver his keynote address today at the annual Macworld convention, where he reportedly will announce that Fox and Disney have signed on to an iTunes video-rental service.

Streaming and downloading movies and TV shows over the Internet on computer screens is nothing new as CinemaNow, Movielink and others have been at it for years.

Apple, though, reportedly will make it easy to watch the content on TV screens, at least for those million or so consumers who have purchased a $300 Apple TV set-top box.

It was at last year's Macworld that Jobs introduced Apple TV as a way to move iTunes music and video to television sets. Some analysts at the time predicted a lukewarm response to Apple TV, that is until video rentals were thrown into the mix, which presumably will happen today.

If Jobs delivers as expected, he will be pitting Apple TV against Amazon and TiVo. Those firms already have received positive reviews for Unbox, an Amazon online video-rental service that, if viewed through a broadband-connected TiVo box, lets users watch content on TV screens.

Netflix also will feel some heat, hence Monday's pre-emptive announcement. The company launched its Watch Instantly service in January 2007 and in its first eight months, customers watched 10 million streams over the Internet.

While few but Jobs know for sure what plans are to be revealed today for Apple TV, Netflix CEO Reed Hastings has downplayed competitive threats, stressing that even the popularity of Netflix's own Watch Instantly is dwarfed by the far more traditional DVD business.

"I'm curious to hear what Steve has planned, too," Hastings said. "He always delivers some surprises."

Netflix had been limiting the number of Watch Instantly hours its subscribers could use to 17 hours per month -- more or less -- depending on their subscription plan. Beginning Monday, though, limits were lifted for all but Netflix's handful of customers who belong to the cheapest plan, where they get one DVD at a time for $4.99 a month. Those customers are limited to two hours a month of Watch Instantly.

While Netflix offers 90,000 DVD titles, it only boasts 6,000 titles for Watch Instantly.

Netflix, like the Amazon-TiVo combo and Apple TV, also will deliver online videos to TV screens, though not until the second half.

Netflix said two weeks ago that it struck a deal with LG Electronics, which could include technology in some of its DVD players and other boxes that would allow users of Watch Instantly to view content on TV screens. Netflix also said it expects to strike similar deals with other hardware makers this year.
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