“This exclusive partnership offers you the ability to instantly stream movies and TV episodes from Netflix to the television via Xbox 360. Xbox 360 will be the only game console to offer this movie-watching experience, available to Xbox LIVE Gold members who are also Netflix unlimited plan subscribers…at no additional cost.”

– Microsoft on its Xbox 360/Netflix partnership, Aug. 2009

So much for Xbox 360’s game console exclusivity on Netflix streaming. This morning, the DVD-by-mail pioneer said that beginning sometime next month, owners of Sony’s PlayStation 3 game consoles will be able to stream movies and TV shows from Netflix.

The feature, which brings an unlimited amount of online viewing with any subscription worth $9 or more, will initially require an “instant streaming Blu-ray disc” to enable it. Not the most elegant of implementations, but presumably a firmware upgrade will likely follow and bake the feature into the PS3.

For Netflix (NFLX), the deal provides a chance to broaden its subscriber base. About nine million PlayStation 3 systems have been sold in U.S., and more than 25 million worldwide. So the potential for new customers here is substantial. For Sony (SNE), which already offers movies and TV shows to PS 3 users for a $3 to $4 fee, it’s a way of removing an Xbox 360 marketing advantage Microsoft (MSFT) has been lording over it since this past August.

And get this: Netflix (NFLX) added a net 510,000 subscribers during the period, 95 percent more than in the same three months last year. In fact, in the past year, Netflix has added 2.4 million subscribers, the most it has signed on in its 10-year history.

“Our business momentum is strong and our third-quarter performance keeps us solidly on course for a record 2009,” Netflix CEO Reed Hastings said in a statement.

Given that and the fact that Netflix beat estimates, it’s odd to see investors dragging the company’s shares down. Netflix fell 4.39 percent to 47.45 in after-hours trading.

“[A partnership with Apple] is something that’s likely to come over time,” Hastings said. “But nothing in the short term. [With] movie watching, we are not focused on mobile yet, but on the TV, on Blu-ray and on the video game consoles. We will get to mobile eventually, including the iPhone.”

Of course, bringing a Netflix (NFLX) streaming-video app to the iPhone will no doubt take some doing–and a few concessions. Certainly, it seems unlikely that AT&T (T) would be thrilled to have Netflix streaming movies over its wireless cellphone network. So at the very least, the company would have to agree make its app Wi-Fi-only.

Digital Daily came bearing sad news on Monday: The Apple (AAPL) event scheduled for Sept. 9 will not have anything to do with a tablet computer. Just music. And from an organization vulnerable to Palm (PALM) poachers. Presumably, all managers present will be exercising caution and using peripheral vision. Netflix (NFLX) was the recent recipient of good news, as John reported this week: Analysts’ research shows that the DVD-by-mail business has a lot of life left in it. Now, if Google (GOOG) will just stay out of that business. The search giant, in any case, might be a bit preoccupied by the Open Book Alliance and that group’s opposition to its Google Book Search Settlement, the $125 million deal that will allow Google to digitize and monetize some 18 million books. Probably won’t be preoccupied for long, though.

MediaMemo returned this week with an explanation for why the relatively mediocre iPhone camera has become the favorite camera on Flickr: It’s already in your pocket, and no one wants to carry another gadget around. Which is likely to become a more common refrain as high-end handsets grab more marketshare than ever and the quality of secondary functions improves. Another common refrain: The one where media companies start charging for content, and people start paying. News Corp. (NWS) (which owns this Web site) is working on assembling the critical mass of publishers it believes is necessary for making this possible.

Over in Personal Technology, Walt Mossberg reviews a robotic investment adviser called Cake Premium and points out some of the reasons you may or may not want to follow its suggestions for what to do with your 401(k). From Mossberg’s Mailbox, Walt answers questions about Windows OS upgrades on the Mac, and some follow-up questions about DriveSharp. In The Mossberg Solution, Katie Boehret tests out Rosetta Stone’s (RST) Totale, a web-based language-learning system that might be the next best thing for immersing yourself in another culture.

Kaufman Bros. analyst Aaron Kessler recently conducted a survey of 700 Internet users (see charts below; click to enlarge) and found that 20 percent of those who aren’t currently Netflix (NFLX) subscribers plan to register for the service in the next five years. Moreover, 68 percent of all respondents said that “the ability to watch videos on the Internet vs. renting from a physical store or by mail” doesn’t much matter to them. Only six percent said that feature is important.

And if DVD rental stores were to suddenly disappear from the face of the earth, 52 percent would turn to a DVD-by-mail service as a replacement. A smaller number, 32 percent, would turn to the Internet.

“DVD by Mail life cycle may be longer than current thinking,” Kessler said in a research note issued today. “While we would agree that a large percentage of the DVD rental market will move to digital in the long term, our survey indicates that the current life cycle of physical rentals may be longer than people think.”

[Image credit: NetFlix Origami]

An industry executive said to be familiar with the company’s plans tells Multichannel News that Netflix plans to extend its Watch Instantly video-streaming service to the Nintendo Wii and to the iPhone and iPod touch as well.

It’s not entirely clear how the company plans to bring Watch Instantly to the iPhone. Presumably, it will use a native iPhone app, since the device doesn’t support Silverlight, Microsoft’s (MSFT) Flash-esque also-ran.

That said, there are some hurdles to negotiate there since native video streaming on iPhone 3.0 doesn’t yet support digital rights management.

Another issue likely to prove problematic: Bandwidth. Watch Instantly streaming typically requires a fair bit of bandwidth and might prove problematic over 3G connections. AT&T (T), which hobbled SlingPlayer Mobile for iPhone over bandwidth concerns, will probably see things that way. Which means Netflix’s app, if it is indeed in development, will be limited to Wi-Fi like the SlingPlayer.

Beyond that and the DRM issue, there’s not much more I can think of to prevent such an app from being brought to the iPhone. There’s not much overlapping content between Watch Instantly and Apple’s iTunes service. And even if there was, there’s no real rivalry here that might inspire Apple to block Netflix’s (NFLX) service. iTunes is run pretty much at break-even to support sales of Apple (AAPL) devices. And a Netflix app for iPhone would arguably help Apple do that as well.

The online DVD-rental pioneer said Thursday that its second-quarter profit rose 22 percent on revenue of $408.5 million. It earned $32.4 million, or 54 cents a share, easily surpassing Wall Street’s expectations of 50 cents per share.

Netflix’s (NFLX) subscriber base finished the quarter at 10.6 million, up 26 percent year-over-year and at the high end of the company’s own forecasts.

“We continued to execute very well in the second quarter and are on track to deliver a record 2009,” Netflix CEO Reed Hastings said in a statement. “As our subscriber base and disc shipments continue to expand, and as we offer more opportunities to watch instantly via the Internet, we believe we are striking the right balance between growth, investment and earnings.”

Absent from the new Sirius app are a number of the broadcaster’s more popular channels, among them Howard Stern’s, which Sirius often claims are responsible for driving more subscriptions than any other. Also missing: MLB Play-by-Play, NFL Play-by-Play and Sirius NASCAR Radio.

That the company calls this app “Sirius XM Premium Online” when it fails to include much of the broadcaster’s more popular content is ironic. That it expects subscribers to pay an additional $2.99/month to access it after a week-long free trial is silly (Note: If you are already a Sirius XM Internet subscriber or subscribe to the company’s Premium Online service, Sirius waives that fee). Without Stern and those other channels, there’s really no reason to. There are far too many other ways to listen free music on the iPhone that don’t require a monthly subscription fee–Pandora, for example. Or Last.fm. And NormSoft’s Pocket Tunes app has been streaming Stern for months now.

Surely, Sirius knows this. So why not include Stern et al? Did a rights issue prevent Sirius from doing so? Did it convince itself that Jimmy Buffett’s Radio Margaritaville and Oprah Radio were compelling enough reasons to download the app? Or perhaps the company is planning a standalone Stern app for which it will charge separately. Or maybe Stern is working on that himself.

And seriously, doesn’t Sirius XM pay Stern too much not to include him?

In any event, the app is an enormous disappointment. Which is too bad. Because Sirius really could have used the few additional subscribers Sirius XM Premium Online might have attracted. With the souring economy weighing heavily on the auto industry–-a mainstay of Sirius’s business–-and partner Chrysler navigating bankruptcy, the struggling company is bracing itself for nasty subscriber losses this year.

If this is all that Sirius XM has to offer on the iPhone, it would have been wiser to do what Netflix (NFLX) did with its Watch It Now online streaming service–provide it gratis to active subscribers as a loyalty bonus. Without Sirius XM’s top-tier content, there’s little to differentiate its iPhone app from Pandora and Last.fm. And Pandora and Last.fm are free.

UPDATE: A quick review of the Sirius Internet Radio FAQ reveals that it is indeed licensing restrictions that prevent Sirius XM from offering NFL, MLB and NASCAR via the Internet and presumably via the iPhone as well. Those same restrictions, however, do not seem to apply to Howard Stern’s channels, which all appear in the Sirius Internet Radio lineup.

UPDATE: Sirius XM has declined comment on the Stern issue beyond what was already said in this morning’s press release.

First up, BoomTown’s anticipation of pistol-packin’ Carol Bartz’s first earnings appearance paid off when Bartz dropped the F-bomb, live and uncensored during Yahoo’s (YHOO) earnings call. And in a very rare occurrence–actually the company’s first-ever year-over-year quarterly sales drop–Microsoft (MSFT) glumly laid out the facts of the recession’s toll on its business. On the musical chairs front, with Chris DeWolfe stepping down as CEO of News Corp.’s (NWS) MySpace, word surfaced that Facebook alum Owen Van Natta would be stepping into the position. The news was confirmed on Friday. BoomTown has all the details, including the press release.

In the ongoing ballad of the newspaper industry, the honor of winning five Pulitzer Prizes at the New York Times (NYT) was offset by news that ad sales are down 27 percent at the paper. In further bad tidings, the newspaper industry is unlikely to get a bailout from Washington. No big takeaways from Apple’s (AAPL) earnings call–Steve’s fine and the company is still not at all interested in developing a netbook. MediaMemo has all the details in a liveblog of the call. MM also notes that Netflix (NFLX) is probably one of the only businesses to benefit from the recession so far since folks are far more likely to rent DVDs than venture out to the local multiplex during these hard times.

In Personal Technology this week, Walt Mossberg discusses the many new OS and system developments coming down the pike that should inform new computer buyers in the near future. In Mossberg’s Mailbox, Walt lays out the details for syncing to an iPhone on MobileMe. And in the Mossberg Solution, Katie Boehret explores the new Nintendo DSi. Compared with earlier iterations of the DS line, as well as on its own merits, it wins some well-deserved praise.

More next week. And RIP, Bea Arthur.

“We do not intend to file for bankruptcy….We have lots of plans to grow our business.”

– Blockbuster spokesperson Karen Raskopf, March 3, 2009

Blockbuster in a Monday filing told the Securities and Exchange Commission what anyone who’s observed its fast-declining fortunes has known for some time now: The company isn’t sure it can stay in business much longer. In a PricewaterhouseCoopers assessment included as part of its latest 10-K, Blockbuster (BBI) acknowledged that its financial situation raises “substantial doubt about the Company’s ability to continue as a going concern” and said it may have to close its doors if its financial situation doesn’t improve in the near future. Seems that $250 million revolving loan Blockbuster announced last week is conditional, and the video rental chain says there is “no assurance” that it can meet its requirements.

An unfortunate turn of events for Blockbuster, but far from an unexpected one. The company did not fare well in its battle against DVD-by-mail pioneer Netflix (NFLX), and its recent efforts to stay relevant have been head-shakers at best. A $1.3 billion gambit for an electronics chain that would go bankrupt less than a year later? A weak (and costly) set-top box offering that would later be made redundant by a deal with TiVo (TIVO)? A vending-machine program with partner NCR (NCR) that, like its entry into the DVD-by-mail market is late to a game it’s already losing? And all these things conceived and launched amid a challenging macroeconomic environment and constrained capital markets. Sad, really. Hard to imagine that 10 years ago Reed Hastings was doing all that he could to convince Blockbuster to buy Netflix…

If inking a video-on-demand deal with a declining DVR pioneer is one of them… well, that’s not much of a plan, is it? But when your financial statements look like Blockbuster’s, I suppose you cling to life however you can (Blockbuster shares have fallen about 80 percent over the last 12 months). And so, beginning in the second half of 2009, the company will make its Blockbuster On Demand service available to TiVo subscribers. The agreement also calls for Blockbuster’s brick-and-mortar stores to sell TiVo DVRs. “We are excited to be teaming with TiVo, the company that created the DVR, to make Blockbuster’s entertainment content readily available to their millions of subscribers,” said Blockbuster CEO Jim Keyes. “Ultimately, our vision is to work with TiVo so that their subscribers can access movies not only through our On Demand service but also from our stores and through our by-mail service as well.”

For Blockbuster (BBI), the deal is a means of capitalizing on the rising popularity of on-demand video. But to really do that effectively, the company needs alliances with more electronics manufacturers than just TiVo (TIVO). After all, the DVR pioneer isn’t in the greatest of health these days. And Netflix (NLFX) already delivers online video to TiVo and PCs, Macs, Xbox 360s, and selected LG and Samsung Blu-ray players as well. Clearly, Blockbuster is as late to on-demand as it was to DVD-by-mail.

Rumor has it there are big games going on this weekend–at least one of which involves football players. The rest involve the usual players, though they might appear in different positions–and on different teams–from week to week. These games, most likely, will continue through Monday and beyond. Scores will be kept on an ongoing basis.

BoomTown wrote this week about a new game of tag taking Facebook by storm. Whether or not you’ve written a list of “25 Random Things” about yourself, you’ve likely read a few. BoomTown only gave up five, but they’re good ones. On defense, AOL announced it would lay off 10 percent of its workforce due to the overall ad meltdown; CEO Randy Falco’s memo to his troops is here. And whether or not AOL has buyer’s remorse over last year’s $850 million acquisition of Bebo, the company is not considering putting the social network up for sale.
BoomTown followed the tough love approach of Yahoo’s (YHOO) new CEO Carol Bartz, and liveblogged the company’s fourth-quarter earnings call, during which Bartz insisted (without mentioning Microsoft) that she wasn’t brought to Yahoo to sell the company. She also shared some canny-folksy wisdom–in the form of a chicken metaphor–about the value of the company as a whole, but it’s still a little early in the game to call that one. Of course, BoomTown had a few opinions about the unspoken Microsoft (MSFT) scenario.

Over at Digital Daily, there was a lot to be said about smartphones. Apple’s (AAPL) so-called “iPhone patent,” which would cover much of the Palm (PALM) Pre’s multitouch and gesture interface, has the potential to be a huge game changer in that race, if it’s upheld. And as if Palm doesn’t have enough to worry about, Sprint (S)–its exclusive carrier for the Pre–is rumored to be preparing to lay off 14 percent of its workforce in March, when the phone is expected to launch. Elsewhere in that contest, it turns out that Research in Motion’s (RIMM) BlackBerry Storm, which was largely panned by critics, is actually selling at a decent clip–one million so far in the U.S. No iPhone, but still, it could be worse. As Digital Daily noted, Dell (DELL) is said to be readying two phones to enter the market dominated by the iPhone, BlackBerry, and soon the Pre: one an iPhone-like Windows Mobile device, and the other a Pre-like Android device. Both could launch as soon as February, but greatness is not anticipated. Digital Daily also kept the tech job-cut score, which increased 74.2 percent from 2007 to 2008. Here’s a roundup of some of those affected.

MediaMemo had some interesting numbers to share: While Obama’s Inauguration was indeed a big day for Web video, it wasn’t as huge as some estimated. Exact numbers are impossible to measure, of course, but roughly 13 million people watched the ceremony online, while roughly 38 million watched on television. On an ongoing (and presumably growing) basis, though, numbers suggest that almost 20 percent of Netflix’s (NFLX) subscribers are using the company’s streaming service to watch movies online. That should increasingly morph back into the world of television as the company’s technology makes it simpler to stream directly to a set-linked device. In the world of print, things continue to look grim. Time Warner’s (TWX) Time Inc., in a standoff with its distributor, which upped its price by seven cents per magazine–has announced it will take its business elsewhere as of Feb. 1. If this is a game of chicken, it’s anybody’s guess who’ll win. And Time Inc.’s Ann Moore received a lifetime achievement award from the magazine industry’s trade group on Thursday. In her acceptance speech, she expressed her belief in the power of magazines and print advertising and her gratitude in the fact that she’s not in the newspaper business.

In Personal Technology this week, Walt Mossberg reviewed iLife ’09–specifically iPhoto, GarageBand and iMovie, with mixed results. In Mossberg’s Mailbox, it was all about Windows 7: Whether it requires new drivers, how it stacks up to XP, and how upgrades from XP and Vista compare with each another. Katherine Boehret reviewed the BlackBerry Curve 8900 in the Mossberg Solution, and liked it.

More next week.

• There may be bugs. We are logging all errors, but if you run into problems you can help out by posting details here in the blog comments.
• Not all movies are available to watch with Silverlight. You may notice errors or lower than normal quality when watching certain titles.
• Our new player works on PCs and Intel-based Macs.
• Windows users should be aware that if you opt in, you will need to use Silverlight on all the machines you use to watch instantly.

I’ve been running the player since Wednesday of last week in Safari and have found it to be pretty slick. The fast-forward feature, which uses three screens within a screen, is a particularly nice touch. The video quality isn’t as high as that offered by Hulu, Amazon, or iTunes, but it’s definitely very watchable. So watchable, in fact, that I sent all my Netflix DVDs back last Thursday and haven’t requested another since. …