OCT. 18, 2010 • PlayStation 3 owners no longer need a disc to access streaming movies from Netflix. The disc was replaced by a Netflix PlayStation 3 software app. In addition to some of the Netflix offerings being presented in 1080p resolution, the PS3 becomes the first consumer electronic device to support 5.1 channel surround sound via Netflix.
Impact: This Surround Sound exclusive is one more sales point in favor of the PS3 platform moving into the holiday season. Sony is correct the PS3 does do more than other consoles. As the system has been priced at a reasonable MSRP for some time now, the value proposition advantage should progressively resonate with consumers during the second half of the platform’s life cycle.Last year in one DFC survey of Xbox 360 gamers across North America and Europe, 37% had either purchased from or subscribed to Netflix on the console. Given Netflix’s growth since last year combined with the PS3’s gains, DFC expects the new Netflix offering on the platform to grow considerably. Meanwhile, a new report from Sandvine, a bandwidth management equipment vendor, indicated that 20% of Internet traffic in peak evening hours was due to Netflix on-demand movie streaming. While the availability on PS3 will likely mean only increased traffic as we head into the holiday video game console buying season, a bigger issue for Netflix on-demand subscribers across all platforms is the likely showdown between Netflix and internet service providers over bandwidth consumption and the cost of maintaining network performance for all ISP subscribers. One possible outcome is an increased fee for streaming movies and TV shows across all platforms. Another option down the road could be a restructuring of the pricing model from a flat free subscription to one based on usage, thereby earning more revenue from heavy users. The parallels to the growing free-to-play movement in online games is clear.