NEW YORK (CNN/Money) - DVD rental company Netflix plans to start a video on demand service over the Internet next year, according to a published report.

CNNfn's Jen Rogers takes a look at Netflix, a company that has devoted followers among film buffs and some critics on Wall Street. Play video (Real or Windows Media)

Netflix CEO Reed Hastings also told entertainment industry trade publication Variety that the multibillion-dollar video game market is another related field that Netflix may or may not enter in the future.

Variety reported Monday that Netflix (NFLX: Research, Estimates), which pioneered using the mail to deliver DVD rentals, is looking at video on demand as a defensive move.

"We're playing it a little defensively, because if we lose the digital download market, you'll soon be hearing about the rise and fall of Netflix," said Hastings to the publication.

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Customers can now rent up to three DVDs at a time from Netflix for a set price with no late fees. Variety said the VOD offering will expand that to allow for up to three physical DVD or digital downloads at a time.

Hastings expects that Internet VOD market is still relatively small, with relatively long download times for even those with cable or DSL Internet connections. He said that the physical DVD rentals will likely stay the preferred rental choice for the foreseeable future. But he expects the growth of wireless home networking and the expansion of digital video recorders, such as TiVo would soon allow consumers to easily transfer content from a computer to a television.