Netflix strictly streams videos, iTunes progressively downloads movies so that you can start watching while it is downloaded, and now Amazon enters the fray with a new Video on Demand service. The main difference between the other two? You don't have to provide the space for storing the video on your PC, Amazon keeps it online for you.
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This means that you can access the movies you have purchased from any computer at any time, or you can even buy a movie at the office before heading home and then watch it on your TV once you get there. Sony is getting in on the act as well and integrating the new line of Bravia TV's with the Amazon video store so that you don't even need a PC. The days of the connected living room are here.