Netflix Web-Only Service Coming, Probably Not Cheap

Hate discs? Love Web video? Netflix should have something for you shortly: At the Web 2.0 conference yesterday, CEO Reed Hastings said a streaming-only option for U.S. subscribers should be available “shortly.”

It’s the third time this fall the company has talked up a Web-only service. And each time it does so it excites some of you who… really like the idea of not using DVDs.

The rest of you? You may be underwhelmed.

The big caveat here is we don’t know what Netflix plans to offer. But my hunch is the company won’t be able to offer a streaming-only option at a significant discount to its most popular $8.99-a-month plan, which also lets you stream unlimited video–and allows you to check out any DVD you want.

Note that:

• The streaming-only service the company launched in Canada this year costs $7.99 a month.
• Netflix has been testing the same service, at the same price, in the U.S. this fall.
• Even though the Netflix streaming-only option only offers about 20 percent of the catalog available on its traditional DVD rental service, the company is paying big money for that catalog. Netflix has already racked up a $1.2 billion digital content bill, which could grow to $2 billion next year.

Netflix has also been testing out a price increase for its $8.99  streaming + disc plan, to $9.99 a month. Perhaps that’s to make the $7.99 option appear that much more attractive ($7.99 also happens to be the new price for Netflix competitor Hulu Plus).

And perhaps $7.99 will be just fine for people who don’t want to deal with discs and envelopes and mailboxes, and want instant video whenever they want it. Even if they can’t get everything they want.

In any case, this could all be moot. While I haven’t seen any reports of a streaming-only option priced below $7.99, Netflix has said it has run “many” tests. So perhaps it has a trick up its sleeve.

For giggles, I asked Netflix PR guy Steve Swasey what he could tell me. His response: “Stay tuned!”

Fair enough. I assume that “shortly” means “in time for the Christmas shopping season, when people start buying shiny new TVs and gadgets that work well with Netflix streaming.” And that kicks off on Black Friday–just eight days away.