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Netflix said that it and partner company Roku will offer a
device that lets Netflix subscribers "stream" movies and
television episodes to their TVs. The player costs $99.99,
Netflix said in a press release.
There are no extra charges or viewing restrictions and
people can "watch as much as they want and as often as they
want without paying more or impacting the number of DVDs they
receive," Chief Executive Reed Hastings said in the statement.
The player is about the size of a paperback book and
requires an Internet connection. It also works with wireless
Internet connection systems through Wi-Fi technology.
Users can fast-forward and rewind the video streams with a
remote control, Netflix said.
Netflix said in January it also was developing a set-top
box with LG Electronics Inc to let subscribers watch movies
streamed from the Web to their TVs.
Several other companies are exploring streaming Web video,
including Vudu Inc, Apple Inc, Microsoft Corpthrough its Xbox
game console, and TiVo, all with varying amounts of material
available.
The Netflix service offered through the Roku player offers
more than 10,000 movies and television episodes, Netflix said.
The amount of movies and shows available on the new service
is one-tenth of the more than 100,000 DVD titles that Netflix
offers through its traditional service, where users order
movies online and have them shipped by mail.
Last month, some Wall Street analysts who follow Netflix's
financial performance, said the company needed to start
charging customers for its free online streaming service.
Netflix's stock fell more than 20 percent one day in April
after it warned that gross margins would remain flat for the
next two quarters as it continues to spend more for online
content for its Watch Instantly streaming service, which it
offers free to subscribers.
Netflix debuted the new player on the same day that Lehman
Brothers analyst Douglas Anmuth raised his rating on Netflix's
stock to "overweight" from "equal weight." Anmuth said the
company was benefiting from strong subscriber trends.
Anmuth boosted his 2008 profit-per-share forecast to $1.26
from $1.24, and raised his price target for the company's
shares to $37 from $31, The new target price is 19 percent
higher than Netflix's Monday closing price of $30.98 on the
Nasdaq.
The analyst expects Netflix will enjoy a strong second
quarter in subscriber growth, and expects subscriber
acquisition costs and churn "to trend lower as Netflix benefits
from the more favorable competitive landscape along with
increased word-of-mouth and more attractive marketing
opportunities."
Netflix shares rose $2.83, or 9.13 percent, to $33.81 in
morning Nasdaq trading.
(Reporting by Robert MacMillan, with additional reporting
by Jonathan Stempel in Bangalore; Editing by Maureen Bavdek)
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