Netflix (Nasdaq: NFLX ) and Microsoft (Nasdaq: MSFT ) just announced something we've been expecting for a long, long time: the Netflix "watch it now" media streams are coming to Microsoft's Xbox 360 this fall. Finally, instant-watching fans can enjoy big-screen streams without connecting a computer to the plasma TV, and without adding yet another box to the crowded entertainment center.
Okay, so some film fans don't have an Xbox -- myself included. There's still room for even better deals from the Netflix perspective: Comcast (Nasdaq: CMCSA ) could probably enable online video streams through its massive installed base of digital cable boxes, and Verizon Communications (NYSE: VZ ) most certainly could boost its FiOS service that way. FiOS is already an IPTV service, just like those Netflix streams. And second-generation Blu-ray DVD players with the BD-Live feature set come with an Internet connection, making them perfect platforms for Netflix.
That said, the Xbox is a big win for Netflix, but hardly a surprising one. CEO Reed Hastings has told us many times that he wants a wide range of streaming options, and the PC version will eventually use a Microsoft Silverlight platform. And oh, by the way, Hastings sits on Mr. Softy's board of directors. From Microsoft's side of the story, the Xbox 360 was always intended to become a media hub rather than a pure gaming platform, and a bonafide movie delivery service gives the company an excuse not to embrace bitter rival Sony's (NYSE: SNE ) Blu-Ray disc format, now that the high-def disc wars are over. Really, it was just a matter of time.
And don't forget that the rich get richer. The Netflix DVD library may boast more than 100,000 titles, but only 10,000 or so are available for online viewing. Having a few serious distribution options will give the company fresh ammunition in its neverending licensing negotiations with the likes of Walt Disney (NYSE: DIS ) and Lions Gate Entertainment (NYSE: LGF ) . If you build the infrastructure, the movies will come. And if you build the movie library, the customers will come. Thanks for packing the infield soil, Microsoft.