The online retail giant decided to link online video and packaged media with its new Disc+ On Demand service.

It works like this: You buy a DVD or Blu-ray that’s listed as a Disc+ On Demand title. The disc goes in the mail and a freebie link to the Video on Demand slides into “Your Video Library” at Amazon.

From there, the movie can be streamed or downloaded. The catch? The online version must be watched within a month — and once the digital copy’s been seen, it goes up in smoke “Mission: Impossible”-like. (Read the Disc+ On Demand FAQ.)

The online bonus version streams and downloads in standard definition, even if you buy the HD. If the disc is returned to Amazon, the Video on Demand fee applies retroactively.

Among the newer titles hooked up with D+D are “State of Play,” “Drag Me to Hell,” “Away We Go” and Coraline.” There are 300-some titles, many of them the usual catalog suspects.

Most of us buying a DVD or BR probably won’t have much use for this — why preview the movie on a home computer before watching the disc on the big screen?

One answer may be gift giving. Wrap the Blu-ray, see the movie yourself. A harmless bit of rebate greed. And of course young kids are all into repetition and immediate gratification, so that’s a fit. (Disney Studios Home Entertainment thinks along the same multiplatform lines these days.)

In any case, give Amazon credit for linking the online and physical worlds in a new way that sort of makes sense. They’re trying, folks.

Watery disclosure: I own Amazon stock and root for it daily.

The $99 black box already streams Netflix’s “Watch Instantly” offerings of primarily catalog films and shows. The Amazon VOD is a solid upgrade, since the service often goes day-and-date with Hollywood’s DVD releases.

Amazon, of course, now sells the Roku Digital Video Player, but you’re still getting it from the manufacturer. Amazon’s usual shipping freebies don’t apply.

The software updates for existing Roku owners are expected this week, the companies said in a press releases about the online video deal.

Beta testers have praised the quality of images but criticized the search functions. Roku users seem to be a happy bunch, except for the lack of Hulu compatibility.

Disclosure, in case you care: This blog carries affiliate ads and links for both Amazon and Netflix.

Amazon Video on Demand (aka Amazon Unbox Streaming Service) has just opened to beta users and goes wide later in the summer. Amazon is giving beta users a $5 Unbox credit to try out the service.

“For the first time, this is drop dead simple (to use),” Bill Carr, Amazon’s vice president for digital media, told the New York Times in a story today.

As expected, the content streams to viewers’ computers and TVs — meaning it can be viewed right away — and is stored in “Your Video Library,” so space isn’t required on local computers. The library allows purchasers to access the content as they please — from multiple places and with multiple devices.

Amazon’s pitch goes like so:

“Don’t want to wait for your video to download? Want to avoid downloading additional software? Want to watch Unbox videos on a Mac? Amazon Video On Demand is the solution to these common customer requests.”

Amazon chieftain Jeff Bezos, pictured, started teasing the streaming video service in late May.

The content can be viewed on a computer or ported directly to television sets via the Sony Bravia Internet Video Link (and presumably similar devices).

The usual studios are involved and pricing arrangements are as before. Viewers who liked the Unbox downloading scheme apparently still have access to that.

Amazon plans deals with other hardware manufacturers who link their home entertainment systems to the Internet.

The indie film locked up unlikely nominations for best picture, best director and best actor (for William Hurt, who won).

True to form, the movie has made a dramatic but hardly sudden reappearance, debuting as an exclusive Amazon Unbox download.

The Hector Babenco film — about a storytelling cross-dresser (Hurt) and his straight cell mate (Raul Julia) — goes for $2.99 as a movie download rental and $9.99 as a download purchase.

Amazon also has the exclusive on the DVD and Blu-ray, which come out July 22.

“Kiss of the Spider Woman” was based on the 1976 novel “El Beso de la Mujer Arana” by Manuel Puig.

The Unbox exclusive looks like it points in a good direction for Amazon’s underperforming download movie service to follow. Of course there are only so many MIA videos out there that anyone cares about. But Amazon’s Unbox just found a good one.

Amazon chieftain Jeff Bezos told the D: All Things Digital conference (in golfy Carlsbad, Calif.) that he was “very serious” about music and video downloads as a business.

This comes in the same week that Netflix’s Reed Hastings predicted the DVD end of his business was headed for a fall in five to 10 years.

Amazon’s streaming option would differ from the existing Unbox video downloads in that the movie would start right away and not hog space on your hard drive. And, we hope, will work on Macs, unlike the Unbox. This being 2008 and all. …

Update: Bezos told Silicon Alley Insider that the new streams would deliver rentals and purchases and pricing will be the same as the Unbox downloads. So the big deal, he says, is the movie starts right away. The lack of a price drop doesn’t make much sense. If I own it, why would I “store it” at Amazon?

Apple’s iTunes store rents movies at a lower rate, but they’re downloaded onto your computer and self-destruct after 24 hours. If you wait a minute, you can start those movies while they download. </update>

Meanwhile, Netflix’s Hastings told investors that the transition to streaming wouldn’t come cheap:

“Our key challenge is growing earnings per share and subscribers while funding streaming, which should give us years of subscriber and earnings expansion.” He said these investments would be “fairly inefficient” short-term.

Hastings added, “Once we’re in streaming … we can attract well beyond 20 million subscribers worldwide.” That’s about 2 1/2 times Netflix’s current subs base.

In another strategic move this week, the Starz premium cable outfit said it was walking away from the Vongo online video platform, in which it pioneered on-demand Internet movies.

Replacing Vongo is Starz Play, which will charge $5.99 a month for access to more than 1,000 movies.

Verizon, which continues to push into broadband entertainment, will be the first to carry the Play product. Its broadband customers can download the movies or watch the Eastern feed of Starz on their computers.

(Disclosure: I own stock in Amazon and Netflix. They don’t make money.)

Order was restored as the remaining slots went to a trio of geeky guy-friendly titles.

Here are the top 5 sellers on the Amazon Unbox download video service, ranked as of early Sunday.

1. “I Am Legend” (Warner Bros.) rental price: $3.99
2. “Atonement” (Universal) $3.99
3. “30 Days Of Night” (Sony) $0.99
4. “Resident Evil: Extinction” (Sony) $0.99
5. “Stargate: The Ark of Truth” (MGM/Fox) $2.99

The eSATA drive — going by the tag of My DVR Expander — bulks up the TiVo’s storage capacity by 500 gigabytes. That’s roughly 600 hours of standard definition or 65 hours of high-def programming, TiVo says. The hard drive has to be bought at Best Buy or on TiVo’s web site, apparently.

All of the four upgrades announced earlier this week are limited to networked-in owners of Series 3 DVRs.

The DVR pioneer also unveiled a multi-room viewing feature, in which the advanced TiVo boxes can stream content to another TiVo box, including Series 2 (sorry, SD only to the 2s). The boxes must be part of the home’s Internet-connected computer network.

“TiVo to Go,” another it’s-about-time feature, allows programs to be ported over to PCs. From there, the video files can watched elsewhere or burned to blank DVDs. Yes, that means they can be sent to iPods and other handheld devices. The PC needs TiVo Desktop software for Windows, Roxio Toast 8 or, for Macs, Popcorn 3.

TiVo also has joined Vudu in the progressive-downloading game. Instead of waiting for movies or TV shows from Amazon Unbox to fully render before playing, owners of TiVo’s high-end boxes now can launch the video files as downloading progresses.

(This capability is one of Vudu’s main sales pitches. The 2-month-old service just lowered the price of the Vudu box from $399 to $250, taking a cue from Steve Jobs.)

Here’s the word on how the TiVo progressive downloading is supposed to work, direct from the company’s antenna-wearing PRists:

When a download begins, the TiVo box checks the speed of the download, and calculates whether you can begin playback. If the download speed is going faster than playback speed, it will let users start playback immediately.

If the download is slower, it will wait until users have enough of the program “buffered” on disk to be able to play it from start to finish without hitting the end of the buffer, and then let you start playback.

None of these are breakthroughs, except in the TiVo universe. While well past due, it’s good to see the upgrades, which signal to company is working hard to justify its existence.

Read the TiVo press release.

The industry watchdog DVD Copy Control Association said it will release software allowing the burned discs to be played on home system DVDs players. The content burned onto a disc cannot be daisy-chained, or copied again.

“This is great news,” CinemaNow chieftain Curt Marvis told the L.A. Times. “We expect the proliferation of burners that can burn these types of discs.”

The process of linking computers to TV screens to play movies hasn’t thrilled many consumers. Even using a device such as Apple TV, the images can look crappy and weirdly framed — good for Starwars Kid but not “Star Wars.” Presumably, the download-to-burn content will permit reproduction that’s competitive with studio DVDs.

The DVD CCA is the same bunch that enforces regional controls on DVDs, allowing distributors to control release patterns around the world. Multiregion DVD players, common overseas, are needed to override that control.

Update : Audio good guys Sonic Solutions detailed their download-burner software technology and said players should be hitting the market in the first quarter.

Movie Downloads. 100% Legal. No membership fees.

NBC Universal and Amazon Inc. confirmed Tuesday that free pilots of the peacock network’s new shows are going up on Unbox starting Monday.

NBC’s revenue-generating downloads such as those for “The Office” and “30 Rock” already are up on Unbox. The network gains pricing flexibility with the deal that iTunes rejected.

NBC provided the iTunes Store with about 40% of its video fare. The NBC Uni-Apple relationship went publicly sour last week, with the network parent saying it would not renew with the music-video download service. Apple then decided NBC’s new shows wouldn’t be going up on its digital shelves.

It’s now listed as the No. 2 downloaded movie on Unbox.

“We’ve got such a huge loyal and tech-savvy fan base for this film. What better way to premiere it than on their home turf, with an online iTunes and Amazon release,” Hewlett said in a statement.

The actor/director is trying to put together an online simulcast to reward his fans for their help in promoting the black comedy. The trailer reportedly has logged more than a quarter million downloads on YouTube.

Hewlett, who is into heavy flacking on his web site, describes the dark comedy as “a head smacking, bone breaking, fiancé bashing romp, with a family that just loves themselves to pieces.” (The dog ate his hyphens, apparently.)

Aside from this detour, the film is going straight to video on Sept. 18. It can be preordered now on Amazon. Some “Stargate” cast and crew members helped make the film, including Christopher Judge and Rachel Luttrell. It was shot in Vancouver. Hewlett’s dog co-stars. Woof.