"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When we look back at Netflix in 2015 or 2020, the whole DVD-by-mail business will seem quaintly outdated -- a larval stage that helped Netflix build its real strengths, which are industry connections and an unmatched database of consumer tastes.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.