NetFlix is clearly preparing to make the transition from DVDs to electronic delivery of rental movies. On Monday, the company announced that it was ending its practice of offering used DVDs for sale. They didn’t say what they were going to do with all those discs, but presumably they will be wholesaled to another company who will then resell them. (Either that, or NetFlix is planning on going into the Candy DVD Christmas Wreath in a really big way.)
The company has also started an open beta test of Microsoft’s Silverlight software for streaming movies to PCs and Intel-based Macs. The “Watch Instantly” collection includes more than 12,000 movies and television episodes, and you can watch all you want for free with any Netflix subscription.
Note that on the company blog, they state that they expect to remain in the DVD rental business “for the next five to ten years at least”, but they don’t provide any indication of what their expected revenue streams will be from physical DVDs versus electronic delivery. I expect that the majority of their revenue will be from the electronic side of the business within five years.