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Pachter: PS3 Netflix deal is only "intermediate step"

Tue 27 Oct 2009 10:26am GMT / 6:26am EDT / 3:26am PDT
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Wedbush Morgan analyst predicts Wii announcement within 12 months

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The recent announcement that the Netflix movie streaming service will be appearing on the PlayStation 3 is only an "intermediate step" designed to circumvent the company's existing exclusivity deal with Microsoft, claims Wedbush Morgan analyst Michael Pachter.

As announced yesterday, the Netflix deal will allow existing subscribers to stream movie titles, at no extra cost, via the PS3. However, while the service is integrated as part of the dashboard on the Xbox 360, the PS3 will require a separate disc to access the same features.

In a new investor note Pacther suggests that the disc is necessary in order not to conflict with existing arrangements for the Xbox 360 - although the specific details of Microsoft's deal with Netflix has never been made public.

"We believe that the exclusive arrangement limits Netflix’s ability to appear on the 'dashboard' for the PS3 or the Wii, but because both devices have open architecture Internet browsers built-in, the solution proposed for the PS3 would likely not violate the terms of Microsoft’s exclusivity," said Pachter.

"We anticipate that a similar arrangement will be announced for the Wii in the next 12 months", he added.

Pachter claims that the Netflix service on Xbox 360, which is only available in U.S., has gained Netflix an extra 600,000 to 800,000 new subscribers. He expects the Sony deal to have a similar effect, with up to 200,000 new subscribers in the final quarter of this year.

Despite predicting healthy growth for Netflix over the coming years, with estimates of an annual userbase of 1.5 to 2 million customers, Pacther has left the company's stock rating at neutral.

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