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Why Did Netflix Need Console Streaming Discs?

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The PS3 and Wii downloadable, disc-less apps are out now for Netflix Instant Streaming, meaning that if you signed up before this glorious era, you received a disc in the mail from them to make your console play streaming content.  Now that the apps are live, it makes you wonder what the cost/benefit was of sending out those discs in the interim.  Surely it cost them some coin for all the manufacturing, development, and shipping.  Was it worth it?

There may have been an exclusivity thing with Microsoft to keep it as the only app-enabled streaming console, I can’t pretend to know for sure, but I do know this…

1. Microsoft pays out the nose for exclusivity deals. They bought up Rare to bring their excellent N64 pedigree/catalog to the X360, which seemed like a great move at the time (the reality is, they didn’t develop much that was remarkable after that).  Microsoft also paid Rockstar millions of dollars to keep Grand Theft Auto downloadable content exclusive to their system for a year.  So I’m sure whatever Netflix had to pay to ship streaming discs wasn’t nearly equal to what Microsoft paid them to not develop an app for a while, if that’s the case.

2. People are still paying Netflix $9/month and they potentially then only had to ship one streaming disc rather than a new one every few days with an actual movie on it that, if lost, costs them more to replace.  Lost a disc with an internally developed (and soon to be obsolete) app?  Big whoop.  That pays for itself within a week.  They made money hand over fist sending out discs, I’m sure of that, and it’s only going to get better for them now.

3. If they did have a deal with Microsoft, good for them for finding a way to circumvent it and make money off a lot of other people in the meantime.  It’s not like MS is ever hurting for cash.  Everyone is so gaga over Windows 7, they’ll be fine.

If Netflix were paid to deliberately not develop the downloadable app for a period of time, they did the smartest thing they could do in putting it on a disc and raking in new customers.  As a big fan of the streaming content service myself, I applaud their efforts.

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About Mark Buckingham

  • VintheDean

    I am glad they circumvented M$ licensing. The only reason I got netflix was because it came to the PS3.

    And because of the open mind of PSN, thenetflix app in the ps3 is the best streaming app on the market. Not even the web based app can beat it.

  • ARIES

    I HAVE TO BE HAPPY AN GRATEFUL FOR NETFLIX GOING DISC LESS. THE GRIPE I HAVE IS THAT THEME INTERFACE WITH IT CHANGED AND TOOK OF THE BEST FEATURES. OTHERWISE, THE 1080I AND LANGUAGE OPTIONS ARE GREAT. THE NEW LOOK AND. SECTIONS ARE AWESOME, AND ALL I ASK IS THE OLD XMB VOLUME CONTROL AND SLOW MO / FAST FORWARD FEATURES BE TUNED UP OR BRING BACK THE ORIGINAL INTERFACE CONTROL BACK.

  • Mark Buckingham

    They did a generally good job of mirroring how the controller face buttons behave on the PS3 in other applications, but the lack of using triggers for FF/RW, slow motion, or even skipping “chapters” (whatever those would be…set time increments?) is kind of puzzling. Hoping they remedy that soon, then I may never stop watching.

  • Glenn Contrarian

    The only reason I got netflix was because it came to the PS3.

    ditto!