Netflix Streaming For Wii, PS3 Still Plausible

Reed Hastings, Netflix CEO

An update to Microsoft’s (MSFT) Xbox 360, which includes new features for Netflix’s (NFLX) movie streaming service, has been stirring up controversy today.

Specifically, language on Microsoft’s site suggests that Microsoft has an exclusive forever on streaming Netflix movies to a game console. “Xbox 360 officially the only console to stream Netflix — sorry, PS3 and Wii,” reads the headline at Engadget.

Here’s where they got that idea — the footnotes of a Microsoft dashboard update document: “Xbox 360 will be the only game console to offer this movie-watching experience, available to Xbox LIVE Gold members who are also Netflix unlimited plan subscribers**, at no additional cost.”

So what’s the deal? Previously, Netflix had only acknowledged that it had an exclusive with the Xbox for an undisclosed period of time, and said that “Netflix has a long-term goal of eventually being on every screen you watch movies on.”

We think that’s still the plan — that Netflix still eventually plans to offer its service for the PS3 and Wii after its exclusivity period with Microsoft ends.

Instead, as Barclays analyst Doug Anmuth says in a note this afternoon: “Rather certain features of the [Netflix] experience on the Xbox, like perhaps Party Watch & direct queue mgmt, may not be available on other gaming consoles for a period of time.”

Why does this matter? Netflix’s streaming service has helped it attract new subscribers and keep existing customers. So the best move for the company would be to make it available in as many places as possible — especially other gaming set-top boxes, which are often already plugged into the Internet. (And it’s not like Microsoft is really doing anything special to warrant an infinite exclusive, which would hurt Netflix.)

Netflix, reached by email, declined to comment on how long the Xbox exclusive lasts.