Netflix on PlayStation 3: The Great Sony-Microsoft Equalizer?

Netflix, Sony PlayStation 3

Surprising no one, really, streaming video maven Netflix will roll out its online TV and movie rental service to North America's nearly 10 million PlayStation 3 owners in November. Sony will announce the deal later today in an action that knocks one of the Xbox 360's "exclusive" pillars out from under Microsoft's games platform.

Another knock: It'll be free to PS3 owners. Contrast with the $50 a year fee Microsoft charges for access to its "Gold" tier Xbox LIVE services, one of the principal being Netflix access. You'll still need an independent Netflix membership, of course, which starts at $9 a month and can run up to $17 depending on the number of movies you care to check out simultaneously.

To be fair, Microsoft's "Gold" service for Xbox LIVE is much more than just Netflix. You can also host "party" chats during gameplay or watch movies together with distant friends, have access to game files early, rate other gamers you've met to influence your matchmaking experience, and play games with or in competition against other players over the internet.

Except that the PS3 offers a few of those features already, gratis. There's no cost to play online, and ranked-play matchmaking's simply handled by the games themselves. Everyone can access game demos, trailers, and add-ons anytime, all the time.

The PS3 lacks some of Microsoft's matchmaking granularity--you can block annoying users, but there's no "reputation" index, like Microsoft's "gamertag" star rating. That's a negative for some, but a perquisite for others, who prefer the simply anonymity of discrete block lists, compared to a star-rating anyone can impact and that follows you everywhere.

To get Netflix up and running, PS3 owners will have to pop a Blu-ray disc in the system, shipped direct from Netflix. The disc will reportedly have to be in the drive each time you use the service, though it seems this may simply be a temporary measure to get the service up and running in time for the holidays. UPDATE: Wedbush Morgan analyst Michael Pachter thinks the disc-based approach is to work around Microsoft's exclusive "on the dash" deal with Netflix. Pachter also believes we'll see a similar Netflix implementation for the Wii in the next 12 months, but doesn't comment on the Wii's potentially crippling lack of HD-capability. Rumors of an HD Wii part coming next fall are swirling, however.

With its 17,000 movie and TV show catalogue, Netflix was a major feather in Microsoft's cap, a feather they'll now have to share with Sony, and at a marketing disadvantage.

Unless, of course, Microsoft drops Netflix from Xbox LIVE's "Gold" tier to the service's freebie "Silver" one, or simply abandons annual LIVE membership fees altogether. I'd say there's as much chance of either happening as of Sony reintroducing PS2 backward compatibility to the PS3 after claiming the feature's been shelved for good.

Expect Sony to champion this as a service "equalizer" in the looming holiday battle royale. Expect Microsoft to respond by highlighting its matchmaking, party chat, and upcoming Facebook, Twitter, and Last.fm integration. Expect Sony to reply with its own unique services like PlayStation Home, Qore (fee-based), and PSP integration.

Expect Sony to dodge the social networking question, but custom versions of services like Twitter and Facebook (among others) to be available to PS3 owners sometime in 2010.

And expect fans on either side of the debate to "express" their opinions on all of this vociferously.

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