Netflix Streaming Coming to a New Device, I'm Betting It's the Wii

On Thursday's earnings call, Netflix (NFLX) CEO Reed Hastings said that sometime this quarter, Netflix's streaming service will be coming to a new consumer electronics device. As a result of this forthcoming offering, Netflix said it was raising their guidance for the fourth quarter.

Clearly, whatever device it is, it must have a lot of penetration in the market if Netflix thinks it will have that much of an impact on their earnings so quickly. While it could be the PS3 or the Wii, if it's a gaming console, my money is on the Wii. To date, Sony (SNE) has sold about 10M PS3 units in the U.S., while Nintendo (NTDOY.PK) has sold more than 25M Wii consoles. When Netflix streaming rolled out on the Xbox 360, 10% of Netflix's members used the service within three months, pushing more than 25M GB of video. Based on those numbers, I don't think the PS3 has a big enough install base to impact Netflix quickly enough.

In order for Netflix to get a lot of traction quickly in the remaining two months of this quarter, the service needs to be coming to a device that has a really large reach. What other device in the home has an install base large enough to make it relevant? The Wii, Xbox 360 and PS3, in that order, are the only devices that have a large enough install base in the living room. The only other possible device I can think of would be a set-top-box, through a cable operator, but most of them would see Netflix as competition.

It's also interesting to note that Netflix launched their streaming service on the Xbox 360 almost one year ago, on November 19th. Many have speculated that Microsoft's (MSFT) deal with Netflix includes Microsoft having an exclusive deal for one year, to be the only gaming console to support Netflix streaming. If that is in fact the case, that exclusivity would be ending in 27 days and it would make sense that Netflix would be talking about a new CE device just a few weeks before.

Comments

[aimee]

Even though the Wii may have more consoles sold in the US than the PS3, I feel like the PS3 may have the lead in this.

The PS3 already has HD features and can play Blu Ray movies and netflix is already available on LG blu-ray players and internet TVs, Samsung blu-ray disc players, and Internet TV

2009 Oct 25 01:30 PM

[vassar]

I am thinking the PS3 too.

2009 Oct 26 09:02 AM