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Netflix and Xbox sittin' in a tree, Renting D-V-D

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May 30, 2008 by Micah Bleich

Netflix partners with Microsoft
Whelp, yet another large company partners with Microsoft, what's
next Pinkberry to provide delicious frozen treats over DLC on Xbox Live
Arcade? mmmmm digital yogurt.

Heres the full article from Gamasutra.com:

Based on comments at a Wednesday Netflix analyst event suggesting the
online video rental service’s focus on “internet-enabled video game
consoles,” analyst firm Wedbush Morgan’s Michael Pachter predicts that
company has either already partnered or will partner with Microsoft to
expand its online streaming capabilities.

The event follows a report in March
in which a Netflix spokesman admitted that the company has recently
polled its users on their potential interest in receiving streaming
movie content via the Xbox 360.

Also, in its Q3 2007 call
to analysts in October, Netflix said that it would consider delivering
movies to its subscribers via internet-connected HD-DVD and Blu-ray
devices, which include the Xbox 360 and PlayStation 3. Pachter notes,
“While there are three such consoles, only one (Microsoft's Xbox 360)
has a sufficiently large installed base to make sense from a streaming
partnership with Netflix.”

At the San Francisco event, which the company used to outline its
revenue and subscriber growth strategy in the face of declining DVD
demand, Netflix emphasized the importance of “Watch Instantly,” its
free streaming service to be offered with its overall service package
for DVD-by-mail subscribers.

Despite initial predictions that Netflix would hit a ceiling in
subscriber growth at the 4-5 million level, Wedbush now believes can
compete for a much larger customer base, especially if it offers
products and services that differentiates itself from competitors. Said
Pachter, “In our view, free streaming video is such a differentiated
service, and Netflix can gain a competitive advantage by building an
integrated product offering.”

Wedbush also believes that the company is investing heavily in building
its online streaming capabilities to the point where it is both a
market leader and a desirable partner for consumer electronics
companies hoping to participate in “digital media convergence.”

Pachter concluded, “The competitive advantage of such an alliance is
clear: Netflix customers who are Xbox Live members will have the
ability to stream online content through their Xbox 360s directly to
their televisions. The ability to do so is available without the Xbox
360, but requires a measure of technological sophistication and a high
tolerance for failure.”

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