As Hannah Montana would sing, it's the best of both worlds.
By itself, it doesn't seem like all that big a deal. Disney and CBS already offer free streaming of their shows through their own sites. But while the networks offer their programming as ad-supported streams, Netflix will present the shows free of commercials.
Perhaps more importantly, Netflix has gone beyond the laptop or PC. The company's streaming service -- available for roughly 12% of its available titles -- can be played on television sets equipped with the $99 Roku Wi-Fi box. Later this year, Microsoft
This isn't a moneymaker for Netflix. It's actually a loss leader, with the company offering its streaming video service at no additional charge to most of its existing subscribers. Why would Netflix pay the content creators, and foot the chunky bandwidth tab, for a service that results in no incremental revenue? Well, it's a pretty good customer-retention tool, don't you think? Rival sites may want to sell you streams and downloads, but Netflix just wants to be your one-stop source for video consumption.
The aggressive push for digital distribution is just one of the reasons why Netflix continues to grow -- now at 8.4 million and growing, a 25% advance over the past year -- while other DVD rental services like Blockbuster's
Companies like Netflix and Apple
We'll cross that network bridge when we get there, of course. For now, it's a sweet deal for Netflix, adding more value to its already popular subscription service. Disney and CBS may further agitate their cable providers and local affiliates, but that's been in the works for some time.
Yes, Hannah, it is indeed the best of both worlds -- for now.
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Longtime Fool contributor Rick Munarriz has been a Netflix subscriber -- and shareholder -- since 2002. He also owns shares in Disney. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.