Xbox 360 + Netflix: Another Nail in the Blockbuster Coffin

At the E3 convention in Los Angeles today, Microsoft announced that this fall 10,000 Netflix movie and television titles will be available to stream via the Xbox 360. The movies will be available to anyone who is both an Xbox LIVE Gold member and a Netflix member at no additional cost.

While Blockbuster is busy messing around with illogical ideas like in-store kiosks, its chief competitor made a killer move today. For Netflix this exposes their catalog of streaming movies and TV shows to 12 million potential customers, while Microsoft gets a significant value-add that may help it fend off the PS3 sales surge and make up for their lack of a built-in Blu-ray player.

Netflix CEO Reed Hastings said in May that he expects the DVD business to peak in 5 years. If that’s the case, and movie watching is indeed moving completely online (Americans watched 12 billion videos online in May), then Blockbuster better get moving on their own set top box, and stop screwing around with bad ideas like acquiring Circuit City. Perhaps Carl Icahn should spend less time on Yahoo!/Microsoft and more time on Blockbuster.

Beyond the implications for Blockbuster and other brick and mortar DVD rental stores, this is also a shot across Apple’s bow from Microsoft. Apple, of course, introduced movie rentals to iTunes at Macworld this past January.

This may also spell doom for the recently released Roku Netflix player. Sure it’s $200 cheaper than an Xbox 360, but it also doesn’t play games.

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  • http://www.dangrossman.info Dan Grossman

    I’m gonna enjoy this update. Playing videos is one of the only things my Xbox 360 still does (it freezes if I put a game disc in it, and it’s out of warranty), and this will bring Netflix off my computer screen and onto my living room “TV” (which is actually an LCD monitor with PC speakers…). Awesome.

  • XboxBlast

    I think i’m going to enjoy this update :)

  • Rfanch

    Blockbuster… dead? you’re kidding right. IMHO– blockbuster’s online service is far more convenient than Netflix. this coming from a former Netflix user. when you’re done with a movie, you can simply drop it off at a blockbuster store. It’s returned, instantly, that night. then your next que’d movie is sent out that very next day. savings? 1-2 nights per movie dropped off in person.

    now, that’s not that big of a deal, right? how about when they throw in 5 free in-store rentals too? when you return 1, 2, or even all 3 of your net rentals to an in-store location, you can walk out with up to 3 rentals at a time, free. that includes blu-rays. then later that month you can do the same with 2 more titles later……. Netflix can only DREAM of such a convenience! Most people live within 5 miles of a blockbuster… sad fact for netflix.

    now, blockbuster has officially announced they will begin bringing online movies in HD-quality to set-top boxes and video game consoles. It didn’t take them more than…… 6 months to jump on board with this. So, Netflix loses the edge there.

    last of all, netflix charges extra if you want your service to include blu-ray titles. no such surcharge with blockbuster.. :)

    So, what benefits does netflix online service have vs. blockbuster’s online service?

    I cannot possibly imagine netflix having a bigger selection. No freakin’ way……….