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Netflix's Instant Watching feature allows subscribers of the DVD rental-by-mail service to stream a select group of 17,000 movies to a PC or a compatible device.  Up until now, the XBOX 360 was the only game console capable of streaming movies from Netflix, but that will soon change as the 360 is joined by its most direct competitor, the PlayStation 3.  PS3 owners will soon have access to the same library of movies by utilizing the BD Live feaures offered by the console when it is used as a Blu-ray player.  Unfortunately, this means that a special Blu-ray disc with the streaming code will be required to use Instant Watching, but this is hopefully a temporary solution until the next major firmware update to the PS3 some time next year.  After that point, the disc should no longer be necessary, and Watch Instantly should just appear in the PS3's Xross Media Bar (XMB).

Netflix Instant Watching has been a feather in the cap of XBOX 360 owners for nearly a year now and is something that really adds value to the console and the Netflix subscription, satisfying the spontaneous urge to watch a movie that DVD-by-mail simply couldn't.  But now PS3 owners will be able to get in on the fun too, along with Wii users if Netflix has its way.  In addition, while the use of Instant Watching on the XBOX 360 requires an XBOX Live! Gold subscription that costs $50 per year, the PS3 uses the PlayStation Network which has no additional cost.

Fanboys of both consoles have already begun debating the merits of each console's approach.  PlayStation loyalists deride the need for the paid XBOX Live! subscription; XBOX fans claim that the XBOX's attractive interface and smooth networking will make it superior.  But the truth is that this may be good news for everyone involved, including PC, TiVo, and Roku users.  The more subscribers that Netflix has to its streaming service, the more clout it will have in getting movies into its library.  And more movies to choose from will improve the experience for all movie viewers using the service.

On an separate note, Roku announced two new players in addition to the $100 Roku HD it had been selling that support Netflix Instant Watching.  At the low end is the $80 Roku SD which, as its name implies, lacks the high-definition capability of its more expensive siblings.  At the high end is the Roku HD-XR which adds 802.11n wireless networking to the unit for $130.  Wireless-N networking should give the HD-XR the bandwidth it needs to stream those high-def videos across the user's wireless network without too many hiccups.

Update on Friday, October 30, 2009 at 10:15AM by Chip Morton

News has surfaced that the Nintendo Wii will be getting the Netflix Watch Instantly treatment in the not-to-distant future, though no release date has been announced.  The addition of this feature to two additional consoles around the one-year anniversary of its release on the XBOX 360 has the smell of an exclusivity agreement between Microsoft and Netflix, but that's just speculation.  Either way, if the reports are true, all major consoles will be capable of streaming videos from the video rental service, perhaps by year's end.

Some would-be users are expressing concern that the Wii, which only supports 480p video output, does not have the capacity to display the video as well as the HD-capable XBOX 360 and PlayStation 3.  That is probably true, but given that Netflix is not streaming high-definition videos, the Wii should have the chops to display anything coming from the service.  The biggest question would probably be whether the Wii can receive and decompress the stream fast enough to play it smoothly.  But I have every confidence that if it can handle pushing polygons in a real-time fashion, it can handle video too.  Any widescreen television should be able to correct the Wii's 4:3 aspect ratio limitation if necessary.

The good news is that like the availability of Watch Instantly on the PlayStation 3, this will expand the audience of potential viewers.  In fact, given that the Wii has sold more units than the 360 and PS3 combines, this announcement will really open the floodgates for potential subscribers.  There are probably a tremendous number of Netflix subscribers who own at least one of the current-gen home consoles.  With the weight of all home console owners behind it, the Watch Instantly service could really take off, and the number of available movies could expand dramatically.

In a related rumor, the Watch Instantly service may be headed for Apple's iPhone/iPod.  This rumor is based on unnamed sources, but it has some merit.  It's in Netflix's best interest to offer the service to as many people through as many channels as possible, and the iPhone/iPod are certainly capable of handling the video stream.  In all likelihood, the service would only be available through Wi-Fi connections, as AT&T seems to be reluctant to allow bandwidth-hogging streaming applications on its 3G network.  That's probably for the best anyway since the quality of video is directly in line with the bandwidth of the connection.  The slower 3G connection could render the video too blocky to enjoy.