Last year, the movie industry raked in more than $40 billion.

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Choose a video from the Netflix video selection screen, and the Rofu box will deliver it to your TV screen.

What are they doing wrong?

Well, for one thing, most people can't consume the product — movies — without getting in the car and driving somewhere, to a theater or video store.

Imagine, though, if you could watch any movie, any time, without budging from your sofa, by downloading it. All kinds of companies have been tripping over each other to deliver this movie paradise, includingAmazon.com, TiVo, Movielink, Apple, Vudu, Netflix, CinemaNow, Vongo and MovieFlix.

Unfortunately, each service is fatally flawed.

Internet download services offer instant gratification, but most require you to watch on your computer screen, which is nobody's idea of normal. Set-top boxes like TiVo, Apple TV and Vudu deliver movies to your TV, but erase your rented movies after only 24 hours. DVD-by-mail services like Netflix offer terrific selection, but it takes at least a day to receive the movies.

This week, Roku and Netflix unveiled a little $100 box that aims to eliminate all of those drawbacks. Delivery to your TV, not your computer? Check. Instant delivery from the Net? Check. Eliminate the 24-hour viewing window? Check.

Oh, yeah — and all the movies are free.

To understand what makes the Netflix Player a flawed masterpiece, it helps to understand its history. (This will take six paragraphs, which you can skip if you want just the punch line.)

Netflix is the largest DVD-by-mail service, with 8.2 million members and about 100,000 movies. Its Web site offers terrific tools for finding, recommending and organizing movies that you want to see. The glaring downside is having to wait for the next DVD to come in the mail. (Yes, Western civilization has come to this: complaining that it takes a whole day to get a movie.)

Early last year, Netflix tried to address that problem with Instant Watching, a service that lets you watch streaming Netflix movies in your Web browser. The movie wait was reduced from one day to 20 seconds.

The best part: there's no extra charge for this. It's free with regular Netflix DVD-by-mail membership (for example, $14 a month to check out two DVDs at a time). You can watch movies all day long, if you like.

Instant Watching introduced a new verb: movie surfing. Watch 10 minutes of a movie and then decide it's not for you? No problem. Switch to a different movie.

The only wrinkle: You're watching on your PC. Only the weird watch "Lord of the Rings" sitting in a desk chair.

"O.K.," said Netflix. "You want Instant Watching on your TV? We can do that." And it came up with the Netflix Player, manufactured and sold by Roku (Roku.com).

This thing could not be simpler. I was watching my first movie six minutes after opening the box.

Like all Internet movie services, the Netflix Player requires a high-speed Internet connection. It found and connected to my wireless network instantly and flawlessly. (You can connect it to your home network with a cable if you prefer.)

It connects to your TV using any kind of modern video connection: HDMI cable, component cables, S-Video or even those old red-white-yellow RCA cables. The nine-button remote lets you choose a movie, skip around in it or pause.

Usually, fast-forwarding or rewinding an Internet streaming movie is a hellish game of guess and wait. You can jump to a new spot on the movie's scroll bar, but you have no idea where you'll land; you don't see a sped-up picture, as you do when fast-forwarding a DVD. Only when you release the mouse and wait 15 or 30 seconds for the movie to "rebuffer" do you see where you wound up.

On the Roku box, little thumbnail images of the movie scenes flash by, one for every 10 seconds of movie. When you stop scanning, you still have to wait 15 or 30 seconds — but at least you'll know you landed at roughly the right scene in the movie.

You're supposed to line up movies for this box at Netflix.com, where a new, second movie queue awaits. Any changes you make here appear on the box in seconds. On the TV, your wish list appears as a parade of colorful DVD cases on a scrolling shelf.

Having to scurry over to your computer can be a drag, but it does afford three benefits. First, it keeps the player's on-screen menus extremely simple. Second, it lets you use all of those great Netflix.com tools to find and pick your flicks. Third, it lets Mac fans enjoy Instant Watching (since so far, watching on your computer requires Windows).

TERRY FOX'S ORIGINAL "MARATHON OF HOPE" VAN IS UNVEILED FOR NEW TOUR

By Steve Gorman

LOS ANGELES (Reuters) - Getting Hollywood actors paid for their smallest performances -- video clips on the Internet -- is shaping up as one their biggest sticking points in stalemated contract negotiations with major studios.

Whether actors must give consent for snippets of their film and TV work to be displayed online, and how much they should earn for them, was the No. 1 disputed issue cited by the Screen Actors Guild after labor talks broke down last Tuesday.

Studios want to freely distribute YouTube-style clips of old TV shows and movies without seeking actors' permission and pay them a flat fee rather than bargain on a price with each performer individually.

The actors' union staunchly opposes that move.

"What they're asking us to do is erase 50 years of our customs and practice," SAG President Alan Rosenberg said in a recent interview.

The debate is the latest example of how the economics of traditional media are being upended by the growing popularity of video-sharing Web sites like YouTube, and how audiences' tastes and habits are being transformed in the process.

According to Internet marketing research firm comScore, 134 million Americans view online videos each month, with YouTube alone attracting 80 million unique visitors monthly.

The bulk of what they see consists of homemade footage and unauthorized clips of TV shows and movies, some of it blended into video "mash-ups" like the popular "Brokeback to the Future" parody trailer poking fun at the "Back to the Future" movies and the gay cowboy romance "Brokeback Mountain."

OLD RULES, NEW MEDIA

Studios and broadcast networks have long been free to use clips for promotional purposes -- as in traditional movie trailers and TV "promo" ads -- without paying the actors who appear in them anything extra.

But when reusing clips as entertainment, such as inserting outtakes or excerpts from one TV show into another, producers must get consent from every performer appearing in that clip and bargain with each separately on a rate of pay.

Under SAG contract rules originating 50 years ago, each performer in a clip must receive at least the "day-player" minimum of $759, even if the clip is just a few seconds long.

Those rules stood the test of time in the pre-digital era, but as companies seek to develop a "legitimate" market for clips to compete with the explosion of pirated footage on the Internet, studios say the old rules have become too onerous.

Instead, they are seeking a fixed payment to actors for re-use on the Internet in lieu of the bargaining process.

SAG says actors fear losing control over their images, especially when it comes to advertising and video "mash-ups."

"We're willing to help them build this new business, but they don't take our concerns seriously," Rosenberg said.

The studios argue that actors' work already is widely exploited -- without their consent or compensation -- through Internet piracy, and that they only stand to gain from clips licensed or distributed by the industry.

"The enormous administrative burden created by (existing) rules ... allows a clips black market to flourish on its own -- with or without us," the Alliance of Motion Picture and Television Producers, the studios' negotiator, said last week.

The clips conflict is an issue unique to actors, one not addressed in the contracts settled this year with directors and striking screenwriters.

Labor talks between the studios and SAG are expected to resume at the end of this month. The existing contract covering 120,000 film and TV actors expires June 30.

(Editing by Bob Tourtellotte and Doina Chiacu)

You could almost see this one coming: IAC (NSDQ: IACI) is prepping a fresh entrant into the crowded "how-to" space, as part of its strategy to incubate a string of homegrown start-ups, paidContent.org has learned. A launch could come in the next couple of months. This has become a suffocatingly crowded area, with a new start-up announcing funding seemingly every couple of weeks. The site, which will be calledLife333.com (a lookup confirms the domain is registered to IAC), will offer a mix of content types, including video, but definitely not limited to that. Details are a little sketchy, but the basic idea is to aggregate how-to content, with an eye towards distributing it across their network, while maintaining a high profile in search engines. A source suggests it has shades ofMahalo and About.com, though again, all based around how-to. It will also produce original content. As mentioned, the how-to space is very crowded, but for a new entrant, taking an aggregation/SEO-driven approach sounds like a smart idea. For the record, IAC declined to comment either way on the story, per company policy.