Later this year, Netflix will launch a new service for downloading movies from the internet. "It will be underwhelming," promises Reed Hastings, chief executive of America's leading online DVD-rental company. Despite a recent ruling by America's Supreme Court that gives entertainment companies more ammunition to fight against illegal file-sharing, movie studios are likely to remain extremely cautious about what films they make available for a fee on the web. For now, that suits Netflix. Mr Hastings believes that the humble DVD—and, eventually, high-definition versions of it-will remain popular for some time, not least because that is what the movie industry wants: sales of DVDS and fees from rentals are an essential source of the studios' profits from new releases. But Mr Hastings is also betting that by the time movie-download technology becomes more mature and online titles more widely available, his subscriber base for DVD rentals will be big enough toput Netflix in a strong position to prosper in the online market-place-where he is likely to face new competitors such as Yahoo!, Microsoft, the studios themselves and, no doubt, many start-up firms offering rival download services.
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