Netflix Streaming Coming to Sony PlayStation 3

Netflix_PS3_1If I was Nikki Finke, I would have proclaimed “TOLDJA!” in that headline. Because I did read Netflix’s (s NFLX) earnings call tea leaves correctly and guessed that the movie rental’s streaming service would come to another game console. Netflix and Sony (s SNE) just announced that Netflix’s TV and movie streaming service will be available on the PlayStation 3 starting next month, ending the exclusive relationship Netflix had with Microsoft’s (s MSFT) Xbox.

The PS3 has an installed base of nearly 9 million, and Netflix closed the third quarter of 2009 with 11.1 million subscribers. During its earnings call last week, the company said it had adjusted guidance up because of an upcoming relationship with a new CE partner that had a “material installed base.” The PS3 would certainly qualify. Interestingly, the Netflix solution on the PS3 seems a little kludgy at first. From the press release:

Initially, watching movies instantly streamed from Netflix via the PS3 system will be enabled by a free, instant streaming Blu-ray disc that is being made available to all Netflix members. The free instant streaming disc leverages Blu-ray’s BD-Live™ technology to access the Internet and activate the Netflix user interface on the PS3 system, which must be online via Wi-Fi or Ethernet.

Netflix members simply slide the disc into their PS3 systems to reveal movies and TV episodes that can be watched instantly. These titles are conveniently organized into a variety of categories based on members’ personal preferences, popular genres, new arrivals and members’ individual instant Queues. Members can use the Netflix Web site or navigate directly on their PS3 systems to add movies and TV shows to their Queues. With the PS3 system’s Wireless Controller, members can choose a movie to watch from their instant Queues or just play directly from any of the lists. They also have the ability to read synopses and rate movies. In addition, they have the option of fast-forwarding and rewinding the video stream via the Wireless Controller.

Netflix members and PS3 system owners can now reserve a free instant streaming disc for PS3 systems by going to Upon availability, the instant streaming disc will be delivered for free by first-class mail, generally one business day after members request it.

The streaming requires a disc? It’s not be the most elegant solution, but it’s cool news on a few fronts.

First, game consoles are predicted to be a dominant force in the over-the-top delivery space, which is predicted to hit $2.9 billion by 2013. Second, it hooks Netflix streaming up with a content partner in Sony, so hopefully that will encourage Sony to free up more content on the streaming side. (Maybe we’ll see Crackle content offered via Netflix?)

Xbox, meanwhile, has been ramping up video features to stay out front of the competition. The PS3 may now have Netflix, but the Xbox is the only game console with the Netflix party social viewing option (which we have yet to try out), and added 1080p streaming to its own Zune video marketplace.

Looks like our upcoming conversation with Netflix CEO Reed Hastings at NewTeeVee Live just got a little more interesting. This is one you won’t want to miss. Last year’s show with Hastings was a sell-out hit, so make sure you get your tickets today.