Netflix DVD service is tops but streaming service is 'limited,' Consumer Reports says

Netflix (Nasdaq: NFLX) believes that streaming is the way to go and it's what consumers want. The company has essentially hung its hat--and its business future--on the idea that it's successful DVD rental business is so last decade and its streaming service is so now. Unfortunately, for the video purveyor, Consumer Reports disagrees.

"Although 81 percent of the subscribers who used a streaming video service in the previous month used Netflix, rival services such as Vudu, Apple (Nasdaq: AAPL) iTunes and (Nasdaq: AMZN) Instant Video all scored higher for overall satisfaction in Consumer Reports' first comprehensive ratings of video services," the magazine stated frankly in a news release.

It wasn't good news in a week when Netflix could have used some. The company's second quarter earnings were enough to discourage the stock market to put its shares into almost a free-fall. Now, the nation's arbiter of consumer wants and desires--and the quality of those services consumers want and desire--was hammering away at what Netflix counts on as its future.

Netflix just doesn't stream enough movies (although the provider is touting its TV offerings as the thing consumers want most), which, the Consumer Reports news release said, "is a common problem with all-you-can-watch streaming services."

Pay-per-view and disc rentals--from which Netflix is notoriously backing away--are more satisfying, the release continued.

"The selection of titles available on pay-per-view streaming services such as Amazon Instant Video, iTunes and Vudu received high marks from more than 60 percent of users," the news release continued.

The backhanded good news, for those dredging for something positive, is that "Netflix's disc-by-mail service and independent video stores were judged to have a more satisfying selection of titles," the release said.

It should be at this point that ears at Verizon (NYSE: VZ) perk up because the release also noted that "Redbox kiosks were neck-and-neck with Netflix." Verizon is still working out the details of its relationship with Redbox on a streaming service. As for Dish Network (Nasdaq: DISH), which now runs Blockbuster, the news was also bad. "Survey respondents were not as impressed with Blockbuster stores, Blockbuster Express kiosks or Blockbuster Total Access disc-by-mail," the release concluded.

All this bad news will be contained in the magazine's September issue.

For more:
 - see the release

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