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Netflix Will Launch Online Service with STB

Netflix VP of original programming Eric Besner revealed some of the online rental service's thinking on the movie download business, saying Netflix is planning to introduce a proprietary set-top box (STB) with an Internet connection that can download movies overnight.

Speaking at an Independent Film & Television Alliance production conference in Beverly Hills, Besner said the business model is still being worked out, but the download service likely would be offered in return for the subscription fee members pay for conventional DVD rentals. Service could launch as early as this year.

Users would add movies they want to watch to their rental queue online as they do now, and those movies would then be downloaded to the boxes overnight rather than shipped through the mail. He said the set-top box is just one of the Internet plans Netflix is working on.

This is exactly the type of over-the-top (walled garden bypass) that cable MSOs and telcos fear the most, since the service is delivered by an established player that already has a recognized entertainment brand combined with an substantial customer base. It's possible that Blockbuster and Hollywood Video will compete in this evolving online delivery space, one way or another.

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