Netflix and Xbox = ingenius. But how will it work?
Wedbush Morgan analyst Michael Pachter is theorizing, with very good evidence, that Netflix is planning to start offering its Internet streaming service. As Pachter aptly points out, what other device could Netflix execs mean when they say they're moving it to "Internet enabled video game consoles?"
Based on Pachter's evidence and info I've gotten from sources, I'd say such a partnership is likely in the next few months, though nothing is yet confirmed. And it's a brilliant idea. One problem that companies like Vudu and Apple (with its AppleTV) have run into is that a lot of people don't want to spend money on yet another device to hook up to their television in order to get video content from the 'Net. The better solution is to do it with devices they already have that serve multiple purposes, like a videogame console.
The real question now is how it would would technologically and business-wise.
Would it be fully integrated into the Xbox Live service? Can the Xbox Live software, not to mention the 360 hardware, comfortably handle streaming? How high quality would it be? And will Microsoft get any cut of Netflix's subscriber revenue, or just be content to have a powerful marketing hook to reach the service's 8 million subscribers? Also, would the deal be exclusive, or could Sony get in on it soon as well?
GameDaily (on BusinessWeek) theorizes that this could hurt Xbox Live Video Marketplace, but I doubt that. The only potential downside is people who are already Netflix subscribers and Xbox Live Video Marketplace users who would be less likely to rent movies from XBL if they could easily stream via their Netflix account (that's a category to which I actually may belong; but I don't think there are a lot of us). However I'm sure that tiny amount of lost revenue could be more than made up for by getting a portion of the Netflix subscriber base to buy Xbox 360s.
Some of them might even use XBL to rent some videos anyway, since Microsoft has the advantage of offering video downloads in high definition, which you can't achieve via streaming.
Chris Morris reports on the business and culture of video games and offers analysis of recent events and industry trends.
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There is a Windows Media Center plugin available that gives your 360 functionality with Netflix. Dan of Game Zone Radio favorably reviewed this feature recently on the GZR podcast. Unfortunately, a Windows Vista PC with Media Center is also required. That's an upgrade of several hundred dollars for me, on top of the console that I paid $350 for.
A Netflix alliance would solve xbox entertainment's first big problem. Namely, their library is spotty, even among big name releases. This is presumably because only select studios have so far been willing to sell their content on the platform. That presumption confounds me, however. Why wouldn't studios want their cotent on the xbox? Presumably, digital distribution costs less than physical media. So, the profit margin should be higher, right?
The other thing that urks me most about the 360's non-game DLC is that all of it is in a pay-per-view format. You can't actually buy and own anything. Do they really expect me to keep a library of TV and movies on my 120 gig hard drive and pay each time I want to watch them?
But the 360 is not alone here. As far as I know, none of the major digital distributors offer movies or television for sale via download? Why is that? Is Hollywood dragging it's feet, trying to protect DVD sales? Again, why would they do that if the cost of digital distribution is lower?
Posted by: Scott Gunsaullus | June 04, 2008 at 09:05 AM
The Xbox is capable of such a feat via Microsoft's Mediaroom IPTV platform which can run on the Xbox 360.
The problem for MS though is no-one has shown any real interest and it requires MS servers running at the back end too ontop of any other costs.
Lastly the increasingly cluttered UI of the Xbox 360 would need get another tab if handling multiple IPTV services as it only permits one extra entry in the video blade for mediaroom.
I dont think it will work out well for MS, what they are trying to do is limit services and not expose them via region location but the nature of the internet will cause grumbling and confusion as to why service x is not available in location y etc.
Posted by: Xen | June 02, 2008 at 04:08 PM