More Consumers Are Choosing Online Over DVD's - CNNMoney

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With the ailing economy, customers are looking for ways to save money - Online streaming is one of these solutions

The positive impact this will have on the 360 and Netflix partnership is yet to be seen, but so far things look rosy for Netflix having just reported one million new subcription through the Xbox 360.

http://money.cnn.com/news/newsfeeds/articles/djf500/200902090815DOWJONESDJONLINE000231_FORTUNE5.htm

SAN FRANCISCO -(Dow Jones)- For an idea of what's vexing U.S. entertainment industry executives these days, take a look at how Todd Mundt in Louisville, Ky., watches television and movies.

Eager to save money, the public radio station employee canceled his cable- television subscription, opting instead to get his favorite shows from a host of free streaming video sites, including Hulu.com, a joint venture of General Electric Co.'s (GE) NBC Universal and News Corp. (NWS). Rather than rent DVDs from Blockbuster Inc. (BBI), Mundt streams movies from Netflix Inc. (NFLX), a cheap and convenient substitute.

Mundt is one of a growing tide of consumers that over the last year or so have begun cutting their cable television subscriptions and shunning DVDs as more content becomes available online and faster broadband connections reach more parts of the country.

Mundt estimates he's saving at least $50 a month by getting his entertainment over the broadband connection he would pay for anyway just to have access to the Web. His prowess at finding entertainment online has also made him the envy of friends and colleagues.

People, particularly young people, are saying all I need is broadband," Time Warner Cable Chief Executive Glenn Britt said recently. "The danger here is...people will choose not to buy subscription video."

Internet delivered movies also threatens to undermine the $14 billion in revenue that movie studios generate by distributing their titles on DVDs. That's because many consumers are asking themselves why they should buy a disc when the same movies are available over the Internet, often at a big discount or for free.

Not all companies will suffer and already potential winners are starting to emerge.

Netflix, the online DVD rental and movie streaming company is a favorite among converts to online entertainment. The Los Gatos, Calif.-based company offers unlimited movie streaming from its 12,000 title catalogue for just $9 a month.

Apple Inc. (AAPL) and Amazon.com Inc. (AMZN), both of which operate successful online streaming services, are also already benefitting, as is software giant Microsoft Corp. (MSFT). In the past three months, owners of Microsoft Xbox 360 game consoles have bought packages that let them stream Netflix titles over their game machines and have watched 1.5 billion minutes of programming over that period.