Microsoft and Netflix unveiled a new partnership at the E3 Media & Business Summit in Los Angeles that will allow Xbox users to stream movies from Netflix to their TV through the gaming console.
“This movie-watching innovation will be available to Xbox LIVE Gold members who are also Netflix subscribers, and will let those users enjoy streaming movies from Netflix on Xbox LIVE at no additional cost,” Microsoft said in a statement.
Netflix members who own an Xbox 360 and subscribe to the Xbox LIVE Gold service will be able to stream movies from the DVD rental company's 10,000 digital title library through their gaming console directly to their TV by fall 2008.
Under the deal announced Monday with Netflix, Xbox 360 owners will be able to pay $69 a year to access all of Netflix’s “watch instantly” 10,000 titles library, which allows unlimited streaming of Netflix content. They will also need to subscribe to Netflix, which charges $8.99 a month for the least expensive streaming plan.
Netflix had already been offering movie streaming for the past 18 months as an alternative to its snail-mail option, but the movies streamed remained to be watched on a computer. This new alliance with Xbox will mean that customers can watch films on a TV, rather than a computer.
Xbox already allows users to rent films for about $2 each, but their movie library is far smaller than Netflix's.
The partnership gives the software giant access to Netflix’s larger movie library and more importantly to its broad customer base.
Microsoft hopes the Xbox will grow from a gaming console to a general hub for entertainment and compete with Sony’s PlayStation 3, which offers movies, videos, and music.
Netflix, which ended the first quarter of 2008 with over 8 million subscribers, a 21 percent increase since the end of the first quarter of 2007, will also have a shot at attracting Xbox Live's 10 million subscribers.
Through the alliance, Netflix is taking a further step to move from mail-in DVD rental to the increasingly popular arena of video on demand.
Earlier this year, it had announced the Netflix Player by Roku, a device that enables Netflix subscribers to stream movies to the TV through a box priced at $99.99.
Apple TV and the Vudu box are already competing on the emerging video on demand market.