Netflix video-streaming goes to PlayStation 3

DIGITAL: Users will play access content through a special Blu-ray disc

By Danny King -- Video Business, 10/26/2009

OCT. 26 | DIGITAL: Netflix will make its video-streaming titles available to owners of Sony PlayStation 3 games consoles starting next month.

The announcement comes after Netflix said last week that it was about to disclose an agreement with a consumer-electronics company with a “material” user base.

“As a leading game console and Blu-ray Disc player, bringing Netflix to the PS3 system is a real win for both Netflix members and PS3 system owners,” Netflix CEO Reed Hastings said in today's statement.

Netflix has been increasing sales and subscribers by augmenting its DVD-by-mail delivery with a video-streaming service that includes both a growing number of digital titles as well as a broader base of electronics components that can play them on televisions. About 9 million Americans have PlayStation 3 consoles, the companies said today.

Netflix has been streaming its titles through Microsoft's Xbox 360 since Nov. 18. The exclusive deal has kept the Xbox 360 the only videogame console to be able to play Netflix's digital titles. Subscribers to Microsoft's Xbox Gold service will still be able to stream Netflix titles from their consoles after the PS3 agreement goes live, Netflix spokeswoman Steve Swasey said.

Unlike Netflix's service through Xbox 360, which is accessible within Microsoft's Xbox Live, for PlayStation 3 users, Netflix will give its subscribers Blu-ray discs that, when installed in PS3 consoles, will provide access to Netflix's inventory of more than 17,000 titles, Netflix and Sony Computer Entertainment America said in a statement today. Netflix and PlayStation 3 users can order the free disc at Netflix's Web site.

Both Sony and Microsoft also have their own digital TV and movie services, but the PlayStation Store and Xbox Live, respectively, offer downloads instead of streaming.

Wedbush Morgan analyst Michael Pachter said early last week that Netflix was on the verge of announcing an additional videogame-console agreement and called Sony the “most likely” partner. Netflix chief financial officer Barry McCarthy said at a New York conference last month that videogame platforms are “ground zero” for hardware devices that will most effectively increase the number of Netflix subscribers who stream video titles, and that the company would consider similar agreements to the one it has with Microsoft as with companies such as Nintendo and Sony for their Wii and PlayStation 3 platforms, respectively, when Microsoft's exclusivity expires.

Netflix's video-streaming service has helped its financials. Late last week, the company reported a 24% jump in third-quarter sales from a year earlier as a higher percentage of its broadening subscriber base took advantage of the company's video streaming.

The No. 1 U.S. DVD-rental service via mail widened its subscriber base from a year earlier by 28% to 11.1 million.

Sony's PlayStation 3 has lagged behind other next-generation consoles Xbox 360 and Wii in unit sales, however, that picked up after Sony cut the PS3 price by $100 to $299 effective Sept. 1. September unit sales of PlayStation 3 leapfrogged those of long-running games console leader Wii, NPD Group said last week.