If Netflix Builds It, Subscribers Will Come

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I've been waiting for this moment for ages, but now the next chapter in movie-watching history is finally underway. Netflix (Nasdaq: NFLX) just landed a distribution deal with Liberty Media (Nasdaq: LMDIA) subsidiary Starz that adds a slew of new releases to Netflix's Watch Now online streaming service.

Now we get to see whether the online viewing model really works. Netflix's service has always lacked the sort of recent, high-profile content that pulls people into their neighborhood Blockbuster (NYSE: BBI) store for a quick fix. Last week, the list of "most watched" streaming content was dominated by indie flicks and episodes of popular TV shows like Heroes and Weeds. The Starz Play library adds a welcome infusion of commercial hit movies like Superbad, Spider-Man 3, and Gone Baby Gone.

There are about 1,000 movies in the Netflix-Starz deal at present, all clearly marked with "Watch this instantly from Starz Play." Over time, all 2,500 Starz Play movies will be available to Netflix subscribers at no extra cost, or for a $7.99 monthly fee if the streamed Starz content is all you want.

Now, Netflix is not the only place to go for Starz Play access. You could also go straight to the Starz site, or get a discounted price if you're buying Internet service from Verizon (NYSE: VZ). But if you buy a $99 set-top box from Roku or an Xbox Live Gold account from Microsoft (Nasdaq: MSFT) with the obvious hardware, you can watch Becoming Jane any time you want on that luscious 50-inch plasma TV in your living room.

This is where everything starts to come together for Netflix. The company can finally offer a compelling mix of new and older movies through its online-only service, back it up with unique straight-to-the-TV distribution methods, and hang the combination out in front of 8 million subscribers for a free taste. And once you get the early adopters hooked on this digital freedom, well, word of mouth is a very powerful marketing tool.

If you build it, they will come. This time, they'll bring their friends, too.

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