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Analyst: Consoles To Create 3 Million New Netflix Users In 2010
Analyst: Consoles To Create 3 Million New Netflix Users In 2010
April 22, 2010 | By Leigh Alexander

April 22, 2010 | By Leigh Alexander
More: Console/PC

Offering its services on connected consoles has "meaningfully" boosted video rental service Netflix's subscriber base, says Wedbush analyst Michael Pachter.

"We believe that the Xbox 360 helped Netflix add 800,000 customers in 2009, a figure that we had expected the PS3 and Wii to each replicate in 2010," Pachter says.

But growth is beating expectations. The analyst estimates that each console -- currently Wii, Xbox 360 and PlayStation 3 all support Netflix digital rentals, although Wii and PS3 require a special disc to be in the drive -- could create 300,000-400,000 new subscribers a year for the service, assuming a 5-10 percent conversion rate of new owners.

That will ultimately mean around 3 million new subscribers from all three consoles in 2010, the analyst concludes, and then 900,000-1.2 million new subscribers thereafter.

Pachter says Netflix CDs for Wii owners, the last to receive access to the service via console, began shipping last Monday. "In our opinion, Netflix on the Wii will not be as popular as it is on the Xbox 360 and the PS3 for two main reasons: the lack of HD on the Wii, and the limited number of Wii users connected to the Internet," he says.

"Further, the Wii audience has demonstrated little commitment to buying videogames (attach rates are at historical console lows), leading us to suspect that many Wiis are relegated to the playroom or (heaven forbid) the closet."

But Netflix's new iPad app is one of the most-downloaded third party applications, says Pachter, although while it will continue to be popular, "this popularity may not translate into a meaningful number of new subscribers, as we expect that a large portion of the the iPadís tech-savvy clientele already have a Netflix subscription."

Earlier this week, Netflix reported first quarter earnings up 44 percent year over year, with profits of $32.3 million and sales up 25 percent to $493.7 million. In total, the company added 1.7 million new subscribers in the quarter alone, bringing it to a total of around 14 million users.

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John Gordon
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Who will take over the living room? Microsoft, Sony or Nintendo? The real answer is D) Netflix. Regardless of how well the console makers do individually, Netflix wins. Although it should not be a surprise that Netflix will be more popular to PS3 and Wii users than it was to XBox360 users. The values of Netflix's customers are closer to the values of PS3 and Wii customers.

The XBox360 is for the hardcore gaming enthusiast.

The PS3 is for the movie and gaming enthusiast.

The Wii is for the more budget-minded customer.

Netflix is for the budget-minded movie enthusiast.

It should be clear that Netflix will have a lot of appeal for PS3 and Wii owners.

Jose Ortiz
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I own the three consoles and have Netflix on all of them. I just wish the PS3 and Wii didn't require a disc and that the 360 didn't require a Gold account. Regardless, I am really happy with the service so far.

Christopher Ross
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@Jose: I use PlayOn on my PC and then stream Netflix to my 360 without needing a Gold account. The interface isn't as nice, but it works fine.

E Zachary Knight
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As a current Netflix subscriber, when they released the Wii disk it made my subscription that much more valuable. Now I have a machine that is continuously connected to my tv and internet that I can watch Netflix on. I could not say that before. So yes I can see this making netflix a better option for those who have not subscribed to it before.

Scott Mullins
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@TheWon Jodecideion:

I was coming to say the same thing, glad to know there are others out there that actually read statistics before making broad statements!

Will H
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@ TheWon Jodecideion

Never knew that! Thx! This Patcher dude is not collecting a pay check for this type of stuff, is he?