We’re watching more video online these days; according to comScore figures, a record 14.3 billion Web videos of all types in December 2008, up 13% from just the month before. Cable nets time Warner and Comcast are reportedly in talks to serve up cable programming over the Web to subscribers who get both TV and broadband. And two separate reports from The Nielsen Company find that (a) Americans viewing video on the Internet watch three hours per month that way, and that (b) the most popular Web video fare in January of this year was full-length episodes of “Lost,”, “Saturday Night Live” and “Grey’s Anatomy.”

So we’re rapidly getting used to the idea that we can watch what we like when and over what device we like, thanks to both the spread of broadband through the land and changes in our audience behavior.

Netflix, the company that changed the video rental business for good, is maneuvering to take advantage of that—and maybe position themselves on the cutting edge of digital delivery in the bargain.

Netflix CFO Barry McCarthy told an analyst meeting on Wednesday that the company plans to develop a new subscription product in the “foreseeable future’: one that offers only streamed movies, no DVDs or Blu-ray discs in the mail.

McCarthy reportedly told analysts that while the company would continue to focus primarily on bundling both mail-order rentals and streamed content into its standard subscriptions, Netflix recognized that some users would value a stand-alone streaming service.

Timing for the launch of a pure-play streaming offer was not disclosed, nor were price points for the service. The most popular current offering from Netflix charges $15 a month and lets renters have two movies out at the same time.

Netflix launched a free “Watch Instantly” option for its customers back in 2007, but the service was slow to gain traction because of a dearth of available titles, especially current movies, and because it was restricted to PC viewing only. The “Watch Instantly” service is available to current subscribers for no extra cost, and movies watched do not count against their rental limits.

But the company now has a library of 12,000 movie titles available for streaming, including content from all the large movie studios including MGM, 20th Century Fox, CBS/paramount and ABC-Disney. In October 2008 Netflix also announced a partnership with cable channel Starz Entertainment to add 2,500 movies and TV shows to a “Watch Instantly” channel called Starz Play.

Netflix has also expanded the range of devices over which users can stream those movies, including TiVo set-tops, Roku digital video players, Blu-ray disc players from LG electronics and Samsung, Xbox 360 videogame consoles, and a coming generation of HDTV television sets from LG.

On February 12 10-year-old Netflix announced that it had passed to 10 million global subscriber mark and in fact added 600,000 net subscribers since January 1, 2009. The company attributed that strong one-month growth to increasing customer appreciation of the streaming service available on various devices. According to Netflix, 20% of its subscribers have now tried the “Watch Instantly” service.

The big issues for any streaming-only product will be price and selection. The selection’s not bad right now, including movies such as “The Visitor,” recently up for an Oscar, and the 2008 seasons of TV shows “NCIS,” “Numbers” and “Heroes”. Okay, “30 Rock” they’re not, but these shows have their fans, and those fans are flocking to the free service.

Which brings up the other question: How to price a stream-only subscription. I’m guessing Netflix will want to bring it in substantially lower than the $15 monthly fee for their top-selling mail service. While people may be getting used to watching long-form video on the Web, they’re also used to getting that content for free (with commercials) from sites like those operated by Fox Interactive, Turner Network, and Hulu.com.

On the commercial-free download side, both Apple and Amazon offer instant video streaming of movies and TV shows, at a cost of around $2 an episode or about $4-$5 a movie. But they have larger selections than Netflix: Amazon offers about 22,000 movie titles, including some available the day of the DVD release, and about 2,500 TV episodes.

By all evidence, Netflix has a hit application on their hands. Now they just have to figure out if they can actually make money with it.

We’re watching more video online these days; according to comScore figures, a record 14.3 billion Web videos of all types in December 2008, up 13% from just the month before. Cable nets time Warner and Comcast are reportedly in talks to serve up cable programming over the Web to subscribers who get both TV and broadband. And two separate reports from The Nielsen Company find that (a) Americans viewing video on the Internet watch three hours per month that way, and that (b) the most popular Web video fare in January of this year was full-length episodes of “Lost,”, “Saturday Night Live” and “Grey’s Anatomy.”

So we’re rapidly getting used to the idea that we can watch what we like when and over what device we like, thanks to both the spread of broadband through the land and changes in our audience behavior.

Netflix, the company that changed the video rental business for good, is maneuvering to take advantage of that—and maybe position themselves on the cutting edge of digital delivery in the bargain.

Netflix CFO Barry McCarthy told an analyst meeting on Wednesday that the company plans to develop a new subscription product in the “foreseeable future’: one that offers only streamed movies, no DVDs or Blu-ray discs in the mail.

McCarthy reportedly told analysts that while the company would continue to focus primarily on bundling both mail-order rentals and streamed content into its standard subscriptions, Netflix recognized that some users would value a stand-alone streaming service.

Timing for the launch of a pure-play streaming offer was not disclosed, nor were price points for the service. The most popular current offering from Netflix charges $15 a month and lets renters have two movies out at the same time.

Netflix launched a free “Watch Instantly” option for its customers back in 2007, but the service was slow to gain traction because of a dearth of available titles, especially current movies, and because it was restricted to PC viewing only. The “Watch Instantly” service is available to current subscribers for no extra cost, and movies watched do not count against their rental limits.

But the company now has a library of 12,000 movie titles available for streaming, including content from all the large movie studios including MGM, 20th Century Fox, CBS/paramount and ABC-Disney. In October 2008 Netflix also announced a partnership with cable channel Starz Entertainment to add 2,500 movies and TV shows to a “Watch Instantly” channel called Starz Play.

Netflix has also expanded the range of devices over which users can stream those movies, including TiVo set-tops, Roku digital video players, Blu-ray disc players from LG electronics and Samsung, Xbox 360 videogame consoles, and a coming generation of HDTV television sets from LG.

On February 12 10-year-old Netflix announced that it had passed to 10 million global subscriber mark and in fact added 600,000 net subscribers since January 1, 2009. The company attributed that strong one-month growth to increasing customer appreciation of the streaming service available on various devices. According to Netflix, 20% of its subscribers have now tried the “Watch Instantly” service.

The big issues for any streaming-only product will be price and selection. The selection’s not bad right now, including movies such as “The Visitor,” recently up for an Oscar, and the 2008 seasons of TV shows “NCIS,” “Numbers” and “Heroes”. Okay, “30 Rock” they’re not, but these shows have their fans, and those fans are flocking to the free service.

Which brings up the other question: How to price a stream-only subscription. I’m guessing Netflix will want to bring it in substantially lower than the $15 monthly fee for their top-selling mail service. While people may be getting used to watching long-form video on the Web, they’re also used to getting that content for free (with commercials) from sites like those operated by Fox Interactive, Turner Network, and Hulu.com.

On the commercial-free download side, both Apple and Amazon offer instant video streaming of movies and TV shows, at a cost of around $2 an episode or about $4-$5 a movie. But they have larger selections than Netflix: Amazon offers about 22,000 movie titles, including some available the day of the DVD release, and about 2,500 TV episodes.

By all evidence, Netflix has a hit application on their hands. Now they just have to figure out if they can actually make money with it.