There's no McLovin lost between Sony (NYSE:SNE) and Microsoft (NASDAQ:MSFT).
Just as Microsoft is rolling out open availability of Netflix (NASDAQ:NFLX) movie streaming through Xbox 360 consoles this morning, Sony is pulling out as one of the few major studios to back Netflix's digital push.
Roughly an eighth of the Netflix catalog of more than 100,000 titles is available through online streaming. The service began as a modest PC-tethered offering last year, but has migrated into the home theater now that Netflix has teamed up with component makers like LG, Samsung, TiVo (NASDAQ:TIVO), Roku, and Microsoft to stream right into televisions.
Sony has played along, offering up even some of its more recent hits like Superbad, Across the Universe, and Spider-Man 2 through the ambitious Netflix broadband-pitched offering. Well, now it's pulling out, but only on the Xbox. It will still stream online through Netflix's other partners.
What the --
How is a 360 different from a TiVo DVR, a Samsung Blu-ray player, or a Roku Wi-Fi set-top box?
Oh, I see. Sony has competing PS3 consoles to move during the holidays. The last thing it wants is to contribute to a rival platform's success. Even if Sony stands to collect a royalty from Netflix on subsequent streams, it would be giving diehard gamers one more reason to choose the 360 over the PS3 during the telltale holiday selling season.
It's a hollow argument, of course. Sony sells televisions right alongside LG. Samsung Blu-ray? Heck, Sony is Blu-ray. Why isn't it going after those home theater appliance makers?
Clearly, Sony is cherry-picking here because there is so much to gain in the video game war. Done right, a blockbuster gaming console can generate a high-margin revenue deluge of software sale royalties. The prospects are even higher now that developers are reaching out directly to the gamers through digital delivery. The stakes are so high that both companies have been slashing their console prices, widely believed to be selling below cost in order to make it up in software volume.
So maybe one can sympathize with Sony's move. Cut it some slack, as it's already making a bold move to devalue its films by offering them through Netflix, instead of saving them for more lucrative piecemeal sale through leading digital video retailers like Apple (NASDAQ:AAPL) and Amazon.com (NASDAQ:AMZN). Holding back on Superbad streaming for Xbox 360 owners isn't personal. It's just business.
A brief history of Netflix's shot to bridge the gap between PC streaming and the home theater:
- The ball got rolling in January, when Netflix hooked up with select LG high-def components.
- The Netflix Player by Roku came out in May.
- A deal with Microsoft was struck two months later, with Xbox 360 playback debuting today.
