Devoted to show business and the entertainment industry

The move by Netflix  (Nasdaq:NFLX) to offer a set-top box for the TV so users can now stream films directly to their television sets, is something they had to do, but probably will have only minimal impact on growing the company.

It will cut into their profits over the short term as well, making it more of a customer retention product, rather than a innovative category killer.

They of course are competing with Apple (Nasdaq:AAPL) and Blockbuster (NYSE:BBI) in this space, who offer a better experience as far as the quality of video goes, but Netflix offers the service for free when buying the box for $99.

You can already see that the company will eventually have to charge for the service, as streaming expenses start to add up and rise; making the offer of free streaming a short-term advantage. They'll either have to charge more for those using it on a subscription basis, or charge for specialty and high-demand products. Another option would be to add advertising in the future.

Either way, all these companies will have to consider that in the future, with some like Apple already doing it through their iTunes store.

Netflix has a huge problem over the long haul, as every service and product they offer is easy to duplicate, making it difficult to brand their way out of being a commodity business, and making them have to compete on price alone.

The company will definitely have to figure out ways to offer products or services connected to the industry, but harder to duplicate if they want to make it. The weaknesses of the business model continue to show as every new move underscores the ease of developing products and services to bring content from the Internet to the TV.

For the new set-top box itself, it isn't going to do much to change the entertainment industry or delivery of content. What it will do is give Netflix some breathing room while they try to figure out how they can retain customers while bringing something unique to the marketplace that can last over a period of time.

Now there is simply not much they are able to do to differentiate. That's going to be a huge challenge over the next several years for the company, and the industry overall.

Related Stories:

Netflix Player by Roku

Netflix Starts Streaming, With Help from Roku

Netflix Set-Top Box Delivers Movies Via Broadband

Netflix Thinks Inside the Box