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Good news for couch potatoes: Netflix and Blockbuster are battling to be at the forefront of movie rentals, offering services to keep up with increasing requests for on-demand entertainment.

Both industry leaders offer competitive online DVD rental plans, and each recently has introduced a unique feature to attract the home entertainment audience:

This month, Netflix unveiled a new service for its subscribers -- free, streaming movies delivered over the Internet to the home computer.

Late last year, Blockbuster launched Total Access, a program that provides the best of both the virtual and brick-and-mortar movie rental worlds.

TV viewing platforms and habits are changing. Computers, portable MP3 video players and telephones are now options for watching downloaded TV shows and movies, especially among younger audiences. While online movie-watching is still a long way from mainstream, rental companies are scrambling to serve these emerging technologies.

That has sparked an ongoing one-upmanship among DVD rental companies.

Blockbuster: Total Access

Total Access is part of Blockbuster's venture into the online rental market. Online subscribers can go to the Blockbuster site and choose a movie from more than 65,000 titles. The movie comes by mail, also with free shipping.

There are two options for returning it: Mail it or return it to a Blockbuster store in exchange for a free in-store movie or game rental. The free movies from the store must be returned to the same store.

Total Access allowed Blockbuster to grow and adapt to a changing world by offering online rentals while still serving its core clientele, which still wants to be able to rent a DVD and watch it that same night. "A large segment will shop online but also wants the immediate gratification of going to a store," says Tami Cannizzaro, director of marketing and public relations for Blockbuster.

It's a strategy that is working. By the end of 2006, Blockbuster had more than 2 million online subscribers. The company credited Total Access for the increase: After the Nov. 1 Total Access launch, the company added 700,000 new subscribers by year's end.

Netflix: Full stream ahead

The company launched in 1998 with a novel concept -- for a monthly fee, subscribers could rent DVDs online and have them delivered and picked up again by mail, with Netflix paying the shipping fees. It has grown to the nation's largest online DVD rental venture, with 6.1 million paid subscribers as of the end of last year.

After Blockbuster announced Total Access, Netflix countered by also giving away movies and giving people the chance to watch something immediately: Subscribers can now watch movies streaming online on their computers at no extra cost beyond the monthly subscription fees for the movies they order online.

Streaming the movie means you have to watch it in real time and can't download it for later viewing or burn it to a DVD and own it.

But it gets around problems with the long time required to download movie files, which are quite large. Once the stream starts, the movie can be watched immediately.

The founders of Netflix believe that streaming video and delivering movies to a home computer is the way of the future, says Netflix director of corporate communications, Steve Swasey, who calls the new feature "our first foray into that future."

Although people who watch streaming video are still in the minority, compared to DVD renters, "it will grow. There's nothing faster than pushing a play button," Swasey says.

The Netflix library now contains about 70,000 titles. Around 1,000 of those can be streamed, with new titles to be added over the coming months.

The service is undergoing a gradual rollout and should be available to all Netflix subscribers by June.

Fees

The number of free movies a Netflix subscriber can stream varies by subscription plan. For example, subscribers on the $4.99/month plan get six hours of online movie watching -- or about three average-length movies -- per month. Subscribers on the $17.99/month plan, which includes unlimited DVD rentals, will have 18 hours of online movie watching per month.

Blockbuster Online subscription fees are comparable to those of Netflix: Prices start at $5.99/month and go to $23.99 for unlimited rentals.

Competitive edge

Blockbuster and Netflix aren't alone in competing for movie rental dollars.

With online retailer Amazon.com's Unbox Video Downloads, one can rent or buy movies and TV programs as downloads instead of ordering them on DVD. Sites like CinemaNow and Movielink offer downloaded movies and TV shows to rent or buy, and some CinemaNow movies can be burned to a DVD for a permanent copy, or one that can be watched on television screens. Other online TV show/movie sellers include Apple's iTunes, AOL Video, Direct2Drive and Movie Gallery.

Neither Netflix nor Blockbuster is revealing any future enhancements to their services, but both acknowledge the search is ongoing. At Netflix, that has meant a constant tinkering, including adding new titles to their library and speeding up the shipping process, says Swasey

"The goal is to provide entertainment," says Blockbuster's Cannizzaro. "We're continuing to evolve as the industry evolves. We don't see this as the stopping point."