Netflix In Pact with Microsoft to Distribute Movies Via Xbox

Includes: MSFT, NFLX
by: Larry Dignan

In the enemy of my enemy is a friend department, Netflix (NASDAQ:NFLX) said Monday that it signed a distribution pact with Microsoft (NASDAQ:MSFT) that will allow Xbox 360 customers to access streaming movies and TV episodes.

The Netflix pact (statement) follows the company’s set-top box effort–Netflix Player by Roku–that is designed to take on Apple TV and iTunes. Not coincidentally, Microsoft is hoping to replicate some of the entertainment success enjoyed by Apple (NASDAQ:AAPL).

Under the pact, Netflix will deliver its library of 10,000 streaming movies and shows to Xbox Live customers. Xbox Live Gold members get the movies at no additional cost.

The agreement kicks off in “late fall.” The companies said Netflix on Xbox 360 is an important part of the “new Xbox experience.” I’d argue that Netflix is really building a moat around its business for the day all content is delivered electronically and so far it’s doing a nice job. After all, Netflix is putting its footprint on multiple set-top boxes.

Random thought: Netflix would make a nice takeover target. Would Microsoft ever acquire Netflix? Could Amazon (NASDAQ:AMZN) be a better fit?