Netflix rides the recession alongside Xbox 360

by Stevie Smith - Jan 29 2009, 12:22

While the vast majority of technology-based businesses are struggling beneath the pressures of economic recession, versatile movie-rental service Netflix appears to be blossoming. And, when looking closer, that success amid such hardship seems to be something of an offshoot connected to continued growth within the videogame industry.

With service availability through certain Blu-ray players, Net-enabled televisions and conventional set-top boxes all helping to widen Netflix’s scope, the decision to push online distribution by bringing an expansive online catalogue of movies and TV shows before the willing eyes of Xbox 360 owners proved to be the icing on 2008’s cake.

Moreover, since offering the Xbox 360 faithful access to its streamed services during 2008, Netflix has seen its fourth-quarter customer base grow to 9.4 million, which is a marked increase over the 8.7 million it notched up at the end of the third quarter.

“The precise impact of the recession is unclear, but it’s clear that streaming is energizing our growth,” enthused Netflix co-founder Reed Hastings. And Netflix sees that growth as sustainable, commenting that it predicts subscription figures will reach 11 million by the close of 2009.

According to Wedbush Morgan analyst Michael Pachter, a well-known commentator on the videogame industry, Netflix and its pocket-friendly business model have directly benefited from being linked to the eight million Xbox 360s spread across the United States.

In terms of content and appeal, Netflix presently offers its customers a choice between 12,000 titles for instant streaming through their televisions or personal computers, with most monthly subscribers able to watch that content for free.

Recent figures released by Media Control GfK show that videogame sales grew by around 20 percent throughout 2008, pushing the industry’s annual performance to $32 billion USD, which outstrips the $29 billion USD racked up by combined sales of DVD and Blu-ray.

Cementing its position as the leading form of sell-through entertainment, videogames accounted for a whopping 57 percent of all home entertainment packaged media sales in 2008.

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