Xbox 360 Adds Streaming Netflix Movies
Posted on: Tuesday, 15 July 2008, 17:02 CDT
Microsoft Corp. announced a deal on Monday with Netflix Inc. that will allow its Xbox 360 users to stream thousands of movies over the Internet.
The announcement was made at the E3 Media & Business Summit in Los Angeles, and highlights the impact of gaming consoles as all-purpose home-entertainment portals.
Xbox previously had allowed movies and TV shows to be downloaded, but the new deal will allow Netflix subscribers to stream 10,000 movies and shows beginning this fall.
"This generation of consoles will change the face of home entertainment more than any other generation before," said John Schappert, corporate vice president of Microsoft's interactive entertainment division.
Xbox 360 is engaged in a battle for consumers’ living rooms along with rival Sony Corp., which has tried to make its PlayStation 3 into a broader entertainment device by including Blu-ray high-definition DVD players in the consoles.
The new deal with Microsoft marks a new expansion for their Netflix, whose services were previously limited to DVD-by-mail and streaming movies on computer screens.
More than 10 million Xbox 360 consoles have been sold within the United States. More than half of Xbox 360 owners pay $50 a year for a "gold" membership, which will be required for access to Netflix's "Watch Instantly" library. They also must subscribe to Netflix, which charges $9 per month for the least expensive plan that includes unlimited streaming.
Netflix may have agreed to the deal because of speculation that DVD sales will begin to decline as more consumers begin to download their movies and shows.
Although Netflix Chief Executive Reed Hastings still believes DVDs will be around for years to come, he has already poured more than $40 million into developing the streaming service.
Until recently, Netflix's streaming service hadn't been a big hit with the company's 8.2 million subscribers, because there was no way to easily watch the movies on anything but a computer.
That began to change two months ago when Roku began selling a small set-top box that could stream to movies to any television set. Roku sold out its initial supply of the $100 player in just two weeks. The device is now back in stock.
Both Microsoft and Netflix share a common rival in Apple Inc., which has battled Microsoft in the personal computer market for decades and last year emerged as threat to Netflix with a downloading service for renting movies and TV shows.
What's more, Hastings sits on Microsoft's board of directors, although he says that connection had nothing to do with the Xbox deal.
Hastings hopes to add about 8,000 more titles to the streaming service during the next 18 months.
Netflix shares gained 60 cents, 2.2 percent, to finish Monday at $27.61. Microsoft stock fell 10 cents to close at $25.15.
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Source: redOrbit Staff & Wire Reports
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