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What Are Netflix and Microsoft Up To?

1 May, 2007 By: Stephanie Prange

Now that Netflix CEO Reed Hastings has a spot on the Microsoft board, speculation has risen as to what the marriage of the computer giant and the No. 1 online DVD rental company could mean.

Microsoft has a long history of rivalry with Apple's products. Most recently, this rivalry has shown up on the portable media player side with Microsoft's launch of the Zune on the heels of Apple's enormously successful iPod. It also shows up in Apple's ubiquitous Mac versus PC commercials that cast the PC as a nerd, with numerous hangups (read software problems), and the Mac as the cool kid.

Could the future of digital delivery also be driven by the rivalry between Apple and Microsoft?

Let's look at some clues.

n During Netflix's first-quarter conference call, Hastings said the company has successfully brought all of its subscribers online with its Watch Now streaming service and hopes to have an Internet-video-to-TV option in place by next year, though he declined to discuss specifics. Meanwhile, Netflix recently signed on to use Microsoft's new Silverlight video browser.

Netflix chief product officer Neil Hunt said the browser provides “rapid and reliable scalability so all our members can enjoy DVD-quality movies immediately on our instant-viewing feature.”

n Apple recently launched Apple TV, a little box that transports iPod downloads to the TV screen, bridging that gap to the living room that has plagued the Internet video universe.

n Microsoft has a little box, the Xbox 360, that is already allowing users to view movies (primarily rental) on the TV through the game console. Microsoft execs have compared the service to Apple's iTunes.

Could Netflix's route to the TV be going through Microsoft?

Whatever route the ultimate digital-delivery service takes, the spoils will go to the team that makes the journey the easiest and most pleasing to consumers. With Reed Hastings on its side, Microsoft has an expert in doing just that for the movie-renting public.

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