Netflix Streaming Coming To A New Device, I’m Betting It’s The Wii
On yesterday's earnings call, Netflix CEO Reed Hastings said that sometime this quarter, Netflix's streaming service will be coming to a new consumer electronics device. As a result of this forthcoming offering, Netflix said it was raising their guidance for the fourth quarter.
Clearly, whatever device it is, it must have a lot of penetration in the market if Netflix thinks it will have that much of an impact on their earnings so quickly. While it could be the PS3 or the Wii, if it's a gaming console, my money is on the Wii. To date, Sony has sold about 9M PS3 units in the U.S., while Nintendo has sold more than 25M Wii consoles. When Netflix streaming rolled out on the Xbox 360, 10% of Netflix's members used the service within three month, pushing more than 25M GB of video. Based on those numbers, I don't think the PS3 has a big enough install base to impact Netflix quick enough.
In order for Netflix to get a lot of traction quickly in the remaining two months of this quarter, the service needs to be coming to a device that has a really large reach. What other device in the home has an install base large enough to make it relevant? The Wii, Xbox 360 and PS3, in that order, are the only devices that have a large enough install base in the living room. The only other possible device I can think of would be a set-top-box, through a cable operator, but most of them would see Netflix as competition.
It's also interesting to note that Netflix launched their streaming service on the Xbox 360 almost one year ago, on November 19th. Many have speculated that Microsoft's deal with Netflix includes Microsoft having an exclusive deal for one year, to be the only gaming console to support Netflix streaming. If that is in fact the case, that exclusivity would be ending in 27 days and it would make sense that Netflix would be talking about a new CE device just a few weeks before.