The company says it’s customers are already watching more content streamed on the Internet than its traditional DVD by mail option. It’s true DVD by mail is getting old and the technology easily exists for Netflix to do most of its business online. But when CEO Reed Hastings says “We are now primarily a streaming video company” I have to call time out.

Netflix has done a great job of getting their streaming service on just about every piece of electronic hardware there is from DVD players to XBox, Wii and even the iPad. But the available streaming library is woefully lacking. There is nothing I would like more than to only use Netflix online and stop all DVD mailings, but if you look at my current movie queue, that’s just not possible. Of the 38 movies I have in que, 19 of them are available for streaming but 19 are only available on DVD by mail. There is no way I will give up DVD by mail until that percentage gets up to 90% of my que available streaming. The only saving grace is that Netflix says it will spend more on licensing for streaming this year than for physical DVD’s. If they really want to be primarily a streaming movie company, they are going to have to get a much larger percentage of their library on the streaming service. So far, that transition has been much too slow, especially if you compare what is available online from Apple and Amazon. Enjoy your DVD’s while you can, because in 5-10 years, they will be extinct as the dinosaur.

Netflix has very smartly pushed their software onto just about every streaming media device available today from Xbox to Google TV, Apple TV, Roku and many Internet connected DVD players. It makes sense for them to offer a streaming only plan to go along with these devices. The only problem is that while Netflix has increased it’s streaming movie and tv offerings, it’s still nowhere near what is available for their DVD by mail customers. For this to really work, Netflix is going to have to push even harder and make many more  movies available for streaming. Eventually, in all reality, there should be no DVD by mail all and everything should be streaming only. You would think movie studios would love this as profits are higher and copying movies is make more difficult. But as with many things lately, the DVD business model is so firmly intrenched change is hard.

It’s becoming more clear that this is where we are going in the future. Content will be largely cloud based and will be available on demand as a stream. It’s best for all parties really even though some will be slow recognize it.

So the question we always want to answer here at Connected World Media, what does this mean to your business? It means the world of the big screen TV may be opening up for you. In the past there was virtually no way anybody but the largest businesses with the most money could get onto television. TV advertising is just too expensive for most businesses. But now, the TV is open to the Internet and services that nearly any business can participate in. Already there is opportunity with YouTube as Apple TV will show those videos. I can’t imagine it won’t be too long before the Vizio connected TV starts supporting YouTube and possibly other Internet video services. You could develop a Boxee application and gain access via that route. Bottom line, there are effective and inexpensive ways for your company, your brand to get onto peoples big screen TV’s. But don’t hit them with the same old garbage from your marketing department (sorry marketeers). You had better be engaging, relevant and entertaining.

In general I don’t trust Blockbuster to pull of either the hardware or the service. It’s not what they do and unless they have a very good partner to help them, I foresee failure. If they can put more pressure on Apple, however,  to get more movies on iTunes or Netflix to accelerate their online initiative, their effort will be worthwhile for end users.

It’s funny to read statements in the article like Blockbuster needs to be careful not to canabolize their brick and morter business. That’s old school thinking. That business is already dead. The best way to survive in a changing world is to put yourself out of business before someone else does. Blockbuster does have a strong brand name and a window of opportunity here to make the leap. Are they savy enough to pull it off?

Well, if I didn’t have to wait for the mail to get a movie. If I could sit in the comfort of my couch and order up movies instantly. Enter Apple TV. Especially with the new Take 2 version of Apple TV where rentals are part of the equation, the speed an simplicity of watching movies on demand is unparalleled.

Netflix and Apple have equal but opposite problems. Apple  has a fantastic distribution system but not nearly enough movies. Netflix has all the movies and then some, but an outdated and slower delivery method. I’m waiting for one or the other to deliver the knockout punch. If Netflix could only deliver online more effectively. Their current system for watching movies online is cumbersome, only works with Windows and is available for very few movies. So, it’s useless. Apple has very few movies available and at the rate they add movies, it will take a lifetime to match the Netflix selection. Also, Apple has some of the more draconian and lame DRM rules for rented movies. Lastly, at $3.99 per movie, it only takes 3 iTunes movie rentals to equal a basic Netflix subscription which gets you unlimited movies per month and no stupid DRM rules.

Now Apple is the 10,000lb gorilla in this match and should be able to knock out Netflix easily, but so long as Apple and Hollywood keep their heads in the ground, they’re never going to do it. I actually blame Hollywood on this one as they are mostly short sided and paranoid. I think Apple does want to knock out Netflix but Hollywood won’t let them. Hollywood execs are more scared of Steve Jobs than they are of the so-called movie pirates. Fear is never a winning business strategy.