Netflix Confirms It's Coming to the Wii, But Most Wiis Aren't Internet Connected

 |  Includes: NFLX, NTDOY
by: Dan Rayburn

As I reported in October, when I got access to some screenshots of Netflix (NASDAQ:NFLX) streaming on the Wii, Netflix confirmed yesterday that come this spring, Netflix members will be able to get streaming video to their Wii consoles. Similar to Netflix's offering on the PS3, users will be required to insert a DVD into the Wii console each time they want to stream something from Netflix.

While the current Wii console is not capable of displaying video in HD quality, for most Wii users, they won't care. I am willing to bet that the vast majority of content that will be consumed via the Wii is going to be content for kids and families where HD won't be a requirement. And in many cases, the content Wii users are going to consume, like cartoons, would not be impacted by the lack of any HD version.

Many have suggested that when Netflix is able to bring streaming to the Wii that it would be a big deal for Netflix since Nintendo (OTCPK:NTDOY) has the most gaming consoles in the U.S. and has sold 26M Wiis to date. While it is a big deal for Netflix, the Nintendo deal won't be as successful or more widely adopted than the Xbox 360 platform, even though Microsoft (NASDAQ:MSFT) has 6M fewer consoles in North America.

The biggest problem is that most Wiis are not connected to the Internet. While it is impossible to know exactly what percentage aren't connected, folks inside Nintendo have told me the figure is as high as 85%. And for anyone who wants to hook up their Wii to the Internet via a wired network to enable Netflix streaming, they have to go out and buy a $25 Wii Lan Adapter. Compare that to the Xbox 360 where Microsoft has said that roughly 80% of all 360 consoles are connected to the Internet and you get a clear picture that the Wii won't have that big of an impact on Netflix's revenue in the short or near term. It's a great deal for Netflix and for Wii users, but the impact to both companies won't be felt within the next year.

Disclosure: No positions