Netflix Adds to Its Collection

"If you build it, they will come."

That's why Netflix (Nasdaq: NFLX  ) is building its online infrastructure around devices you may already have in your entertainment center, right next to that 52" LCD screen. You can already stream the "growing library" of digital movies from Netflix through an Xbox 360 from Microsoft (Nasdaq: MSFT  ) , Blu-Ray players from Samsung and LG Electronics, or your boring old computer. Soon, you can add the PlayStation 3 from Sony (NYSE: SNE  ) to that list.

That's right -- Netflix and Microsoft may be chummy, but it's not an exclusive friendship. The Sony move adds nearly 9 million potential customers who may have been holding their breath until the PS3 could stream these movies. Now, there is probably a good-sized overlap between the two demographics of existing Netflix subscribers and PS3 owners, so for many users this will amount to just a nice new feature.

Still, this should be good enough to pull in a few fence-sitting video gamers who weren't too sure about this movies-by-mail business. I would have preferred to see Nintendo (OTC BB: NTDOY.PK) joining the Netflix fold because I own a Wii, and so do some 21 million fellow North American Wii gamers. With only 9 million systems sold here, the PS3 is the least attractive partner among the video console makers. Netflix is probably working on a Wii deal behind the scenes, but has "nothing to say about it at this point."

No big deal, though. The overarching goal is to make Netflix streaming available through as many channels as possible. CEO Reed Hastings won't rest until every Internet-connected TV set, game console, Blu-Ray player, TiVo (Nasdaq: TIVO  ) recorder, and cable box presents your queue of streaming movies at the flick of a button. When Comcast (Nasdaq: CMCSA  ) signs on, it'll be time to be truly ecstatic about Netflix as a digital media provider. And I do believe that will happen in the next couple of years. The rich get richer, and Netflix is building up a fine head of steam in its partnering efforts.

When we look back at Netflix in 2015 or 2020, the whole DVD-by-mail business will seem quaintly outdated -- a larval stage that helped Netflix build its real strengths, which are industry connections and an unmatched database of consumer tastes. Netflix might become the king of digital media, though rivals like TiVo and Amazon.com (Nasdaq: AMZN  ) surely will give Netflix a run for its money.

I think it's fair to say that Netflix is off to a brutally good start, though. That's why I'm not selling my Netflix shares despite the recent run-up. I'm in it for the long haul. How about you? Let me know in the comments below.

Fool contributor Anders Bylund owns shares in Netflix, but he holds no other position in any of the companies discussed here. Amazon.com, Netflix, and Nintendo are Motley Fool Stock Advisor recommendations. Nintendo is a Motley Fool Global Gains recommendation. Yes, a stock off the Pink Sheets can be a double newsletter pick! Try any of our Foolish newsletters today, free for 30 days, to find out why we love Nintendo so. You can check out Anders' holdings and a concise bio if you like, and The Motley Fool is investors writing for investors.


Read/Post Comments (5) | Recommend This Article (5)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 27, 2009, at 7:37 PM, feldmail wrote:

    Anders, I heartily agree with your comments. I think when we look back, 5- 10 years from now, everyone will say how obvious it was that Netflix was well on its way to becoming the next Microsoft or Google. Only, to many, it is not obvious. In fact, I just read today that Janney Montgomery Scott reiterated its sell citing DVD competition from Redbox. Redbox sells DVD's and that business has only a dwindling future. 42% of Netflix own customers were using the streaming service in the last quarter!

    Netflix is building a monopoly. BTW, you mention Tivo as competition. Netflix streams on Tivo.

  • Report this Comment On October 27, 2009, at 11:26 PM, 365BabyGear wrote:

    I've been using netflix for around a year now (had tried it years ago and really disliked it, but it was a couple discs at a time for a higher price and shipping lagged because I was in the boonies so I canceled)...

    I closed my blockbuster online account when I signed up for a netflix trial, being able to stream shows/movies whenever I want was a giant part of my choice.

    We don't have a PS3 yet, but we would like to get one at some point, we do have a wii though and I sure wish they would stream to wii!

    One thing I wonder, I've heard that the 360 has a select few movies to watch via netflix, and not the whole library... will it be that way on PS3 also?

  • Report this Comment On October 28, 2009, at 8:47 AM, feldmail wrote:

    The Xbox streams the entire streaming part of Netflix's library, over 17,000 titles. Just about any of the older classics or most popular movies (other than new releases) are available for streaming. I bought the Roku box for $100 and it works perfectly right on my TV.

  • Report this Comment On October 29, 2009, at 6:34 PM, marcsumus wrote:

    For those of you wishing for Netflix streaming on the Wii, I bring good news!

    http://feeds.gawker.com/~r/lifehacker/full/~3/yBKcdQyLgjU/ne...

  • Report this Comment On October 29, 2009, at 6:44 PM, stan8331 wrote:

    Netflix has truly superior management and content people want. I think that in 2015, there will be a whole bunch of folks wishing they had bought Netflix way back in 2009.

    A Nintendo/Netflix partnership should be greatly beneficial to both companies - I think it's only a matter of when...

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