• CNNMoney, Wednesday, January 17, 2007 10:46 AM

Netflix took a giant step into the future by announcing earlier this week that the DVD-by-mail subscription service will start renting movies and TV shows via the Internet. The company is introducing the service in a phased rollout over the next six months, offering subscribers more than 1,000 movies and TV shows on their personal computers at no additional cost.

This doesn't mean Netflix is getting out of the DVD-by-mail business. High-speed Web networks still aren't high-speed enough to make movie downloads fast or convenient. When that day comes, software delivered via DVDs and CDs will die. How does the company respond? By raising subscription rates, or by selling advertising in a similar manner to the cinema advertising of today-a nice idea, but we all hope they don't show nearly as many ads as in movie theaters.

Netflix will use a combination of download and streaming technology to deliver films, but HD-quality is still years away. In the future, the company plans to expand the service to cell phones and TV screens.

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