SCEA and movie rental company Netflix announced that they will bring the latter's "Watch Instantly" online streaming service to PlayStation 3 this November, offering the feature for free to U.S. system owners and Netflix members with an $8.99/month or higher subscription.
The Xbox 360 has offered Netflix movie and TV show streaming since last November with the launch of its "New Xbox Experience" dashboard update, but unlike the PS3's promise of no additional fees, using the feature with Microsoft's console requires a paid Xbox Live Gold membership.
"The PlayStation 3 system has always been about more than just gaming, and it will soon be the only platform in the industry to offer consumers such a variety of convenient options for enjoying movies and TV shows," says SCEA president and CEO Jack Tretton.
Netflix subcribers will be able to reserve
a free, instant streaming Blu-ray disc that will activate the Netflix user interface on their internet-connected system. With the disc inserted into their PS3, members can play more than 17,000 movies and TV episodes, and browse through categories based on their personal preferences, popular genres, new arrivals, and individual instant Queues.
Users will also be able to add items to their Queues through either the Netflix Website or directly on their PS3. It's unclear if Netflix and SCEA plan to eventually provide an alternate method of connecting to Netflix that doesn't use the Blu-ray disc, but a press release from the companies indicates this is just their "initial" arrangement.
Wedbush Morgan analyst Michael Pachter hypothesizes that the disc requirement is an intermediate step taken to comply with an exclusive arrangement between Netflix and Microsoft's Xbox 360, preventing other video game consoles from displaying the service as a convenient item on users' dashboards.
"We believe that the exclusive arrangement limits Netflix’s ability to appear on the 'dashboard' for the PS3 or the Wii, but because both devices have open architecture Internet browsers built-in, the solution proposed for the PS3 would likely not violate the terms of Microsoft’s exclusivity," says Pachter. "We anticipate that a similar arrangement will be announced for the Wii in the next 12 months."
The analyst notes that Microsoft and Netflix's arrangement contributed around 600,000 to 800,000 new subscribers to Netflix's 11.1 million userbase (as of last September) over the past year. Pachter adds, "We anticipate that the Sony arrangement will have a similar effect, and expect to see subscribers grow by an incremental 200,000 or more in the December quarter."
"We believe that the potential market for Internet-capable consumer electronic devices is quite large, and believe that Netflix can drive new subscriber growth in excess of 1 million customers annually through these arrangements," he continues.
"The introduction of a 'streaming-only' service internationally is likely a test for a similar offering in the U.S., and we think that the company has the potential to attract 1.5 – 2 million customers annually for the next several years through its streaming offering."