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DEREK: It's got the Nintendo Seal of Quality though! Hello and welcome, you're watching Stop Skeletons From Fighting, I'm Derek Alexander, and this is a Netflix disc for the Wii. And no, it's not like a collection of Office episodes or anything like that, it was used to access Netflix streaming for your Nintendo Wii. And it was the best game on the system! "Best game on Wii!" Okay, so why do I need the physical thing to make the thing do a streaming thing? You didn't always need this disc, right? And yes, that is true! But the real answer is a little more complicated than you might thi-- Microsoft. It was Microsoft. Okay, it actually IS a little more complicated than that. But when Microsoft was gearing up for the seventh generation of consoles, they had their eye on the prize: Crushing Sony and winning control of the living room. Sony was gonna give it their all too... or at least they tried to. But the problem was that no-one was prepared for what Nintendo did with the Wii. Suddenly, Microsoft and Sony had to scrap for second place, and no-one's happy with that! Except for Nintendo. But what does that have to do with Netflix? Well, the Wii proved that there is an untapped casual market out there that didn't care about having the bestest and most hardcore machine, as much as they cared about convenience and family-friendly fun! And that you could make a couple 'o bucks catering to it! Netflix was part of Phase 1 in a multi-stage attack that included things like the Kinect, for example. So Netflix, on the way to becoming "& Chill", and the content-spewing juggernaut they are today, decided to become a disc to transition out of shipping discs. This is the story of how Netflix became a weapon in the seventh-generation console war. Before Netflix became a juggernaut, making billions streaming original content, they weren't streaming anything at all! As most of you undoubtedly remember, Netflix used to only be a DVD rental company. Launched in 1998, they actually didn't make the jump to their monthly subscription model until 1999. From there they kept growing and growing, even offering themselves up to Blockbuster Video for sale, - they said no, by the way. Rest in peace - and recorded their first profit year in 2004. Naturally, there was the struggle to keep growing, and Netflix ultimately decided that streaming was the future. So they set to work on a physical Netflix box, which would be the all-in-one exclusive Netflix streaming solution. But! Then in 2005, YouTube exploded onto the scene, causing Netflix to rethink their strategy. Netflix should instead be everywhere and anywhere! That was their path to even more growth. They went from a box to an app. While Netflix was deciding to transition away from physical media, two other companies were doubling down on it: Sony and Microsoft. They were very busy duking out for supremacy over the living room. Microsoft rushed their Xbox 360 to market in time for the 2005 holiday season, beating Sony's PlayStation 3 by a full year. They even decided to support the competitor to Sony's new Blu-ray standard, Toshiba's HD DVD, for no real reason other than they had "F*** you" money, and also, being a Blu-ray player was the one thing the PS3 could hold over the Xbox 360. But that's not to say that Microsoft wasn't carefully watching the future of streaming media, especially since online downloads through their Xbox Live store were already making them buckets 'o bread. So they got to work on making technology to support media streaming, and came out with Silverlight, a framework used by Netflix once it officially rolled out its Watch Instant online service in 2007. Microsoft then had Netflix CEO Reed Hastings join their board of directors. Netflix and Microsoft were definitely gettin' pretty cozy, right? But back to the HD DVD/Blu-Ray war: Now, this particular format war was relatively short-lived. Even though Microsoft had functionally buried Sony with its console sales, and even released a little HD DVD add-on for the 360- Hey! Who had one of these things?! The fledgling format of HD DVD officially crashed and burned in January 2008, when Warner Bros. announced they would be pushing their library to Blu-ray. Now that Microsoft had lost the physical format war to Sony, they needed to win the next one: Streaming. Anything to dominate the living room. So, so far we've laid out the major players: Netflix, Sony, Microsoft, but we're ignoring the elephant in the room: Nintendo and the astronomical success of the Wii. Releasing in holiday 2006, the Wii was the moment when gaming transitioned from, at least perceived by the culture at the time, for weirdos and nerds and kids, to being something for truly everyone! Nintendo successfully tapped into the casual market for games, and was running circles around the competition! And that needed to be answered by Microsoft. So! At E3 2008, Xbox rolled out Phase 1 of their big plan to expand from being the default shooter console, to a console for the whole family. The New Xbox Experience, a.k.a. NXE. NXE rolled out an all-new, friendlier Xbox: The UI was all-new, they added Avatars, which were a blatant copy of Nintendo Miis, but they also exclusively included Netflix! Yes! Xbox was the first and only console with Netflix on it! Today Netflix is so ubiquitous that it accounts for 15% of all internet traffic, but in 2008, there was only one game console with Netflix! And with Xbox 360, you could even watch Netflix live with your friends in a party - Oh my god! There was a time when you could basically livestream Netflix! And it was only ten years ago! But there were a few catches: 1: Users could only manage their Instant Queues from a computer, not the 360, 2: It required users to be both Netflix subscribers and Xbox's $50-a-year Gold membership, and lastly, not all movies and shows available on the rest of Netflix would be available on Xbox 360. While you could still watch your Office, you couldn't enjoy properties from, say, Sony-owned Columbia Studios. [scoffs] Geez! C'mon Sony, that's petty, even for you! And well, how WAS Sony doing anyway? At that same E3, they announced that they would be adding on-demand video rentals to their PlayStation Store, a feature that, by the way, had already been available on Xbox 360 for over a year at that point. The fact is that even beyond PS3 lagging behind Xbox 360 in exclusive killer apps and games, they were also severely behind on Xbox's online features. Part of the reason is that Xbox was divided into two tiers: One that was free, and one where users could pay 50 bucks a year to use online multiplayer, while all of PlayStation Networks' sparse online features were free, meaning Sony wasn't making the same kinda money Xbox was making on their live features, so Sony had less to invest back into their online offerings. "Ya gotta spend money to make money." PSN being free was theoretically a good tactic to grab users from Xbox Live, and was something of a sticking point for Sony. Here's a REAL quote from the director of PlayStation Network at the time: [laughing] Oh my god! It'd be a whole separate video just to break that quote down, so let's just move on! Woof! The New Xbox Experience officially launched in November 2008, accompanying slashed prices for all Xboxes, and the quiet release of the Jasper model of Xbox 360's, which, by the way, were the hardware fixes for the dreaded Red Ring of Death. In the first month after the deployment of NXE, over a million people downloaded Netflix, and Xbox Live started adding half a million new active users every month. It was also a good end of the year for Netflix: Over a quarter of its 9.4 million subscribers were using Watch Instant, and it was slowly spreading onto more devices. Microsoft also came out like a bandit, with a barrage of banger Xbox exclusives, and selling six million 360's worldwide over the holidays, for a total of 28.5 million. PlayStation did... er, a bit worse, with less high-performing exclusives, and selling 4 million PS3's worldwide, for a total of 21 million. Sony would continue to fall behind in online users as well: By June 2009, PlayStation Network only had about 11 million active users. Compare that to Xbox Live's 20 million, with about half of those being paying Gold users. So things were lookin' really good for Xbox, right? Well, as Summer 2009 crept into Fall 2009, Microsoft started making some perculiar public boasting: In August, they released an update that reiterated that Netflix was exclusive to the 360. "This EXCLUSIVE partnership offers you the ability to INSTANTLY stream movies and television episodes" "from Netflix to the television via Xbox 360." "Xbox 360 will be the ONLY game console to offer this movie-watching experience." And then they rebranded their on-demand video store as the Zune Marketplace, - Oh god, y'all remember the Zune?! Man, who had a Zune? Who's 'bout that Zune lifestyle? Hit me up! - and updated Silverlight to allow for people to stream downloads from the store, at 1080, with surround sound. Wait... you got Netflix exclusive, why're you also cramming in Zune and beefing up Silverlight all of a sudden? Hmm... could there be trouble in Netflix & Microsoft Land? Of course there was, I mean, you already know about this disc, right? So, Netflix had never been shy about its ambitions to be on every device ever, so Netflix was about to do what Netflix do: Tart it up with the competition! In October 2009, Sony announced that Netflix was coming to their consoles. It would be just like the Xbox Live, except it wouldn't require an extra paid subscription, and would need to be accessed with a special Netflix disc that you had to order. But still, the disc was free, and that wasn't so bad, right? From their press release: "The free instant streaming disc leverages Blu-ray's BD-Live™ technology" "to access the Internet and activate the Netflix user interface on the PS3 system," "which must be online via Wi-Fi or Internet." Wow! Blu-ray streaming! Blu-ray... BD-Live™! Whatever that is! It sounds like- Bull***. And it was bull****! It's total bull****! Stupid spin!! It's so dumb! Researching this stuff is so interesting! Can you believe this?! I love it!! Like, Netflix went to Brazil on the PS2, as well as on a disc! Ah, Brazil. Where Mortal Kombat 3 is on the Master System, and Netflix is on the PS2. Now obviously, this whole mumbo jumbo about Blu-ray BD Experience, Live, whatever, was just spin. The key part of the press release is this little phrase: "to access the Internet and activate the Netflix user interface." Basically the disc just adds an extra step, so Netflix technically didn't go back on their deal to allow the 360 to be the only console to instantly stream. It was ballsy and ingenious, I mean... [clapping]
Way to have no shame, Netflix. Well done. And like Microsoft, this deal with Netflix was just one in a string of moves from Sony to finally get the PlayStation 3 really moving. In September 2009, one month before the Netflix announcement, the PS3 Slim was released: It brought down the price of the PS3, and was the moment when the gap on console sales with Microsoft began to close. They also managed to have some genuine PS3 exclusive hits that year with Uncharted 2 and Infamous. Over the year of 2009, Netflix's subscriber numbers had climbed to over 12 million, they were on a ton of devices, and they had doubled the amount of subscribers using Watch Instant. But the big question that remained on everyone's lips, and I imagine yours too, since you made it this far in the video: While all this 360 and PS3 drama was cute, the facts remained that the Wii accounted for over HALF of the games market at that point. And finally, in January 2010, Netflix and Nintendo announced that they would be bringing Netflix to the Wii. Yes, finally we get to the disc! But don't forget, this was officially the second decade of the new millenium, and consumers were far away from the days when they had to choose between Blu-ray or HD DVD to hook up to their first HDTV. And while the Wii was a sales juggernaut, it lacked some key high-definition features. When asked about this, Reggie Fils-Aimé, then-president of Nintendo America, replied that "The vast majority of content that is available for streaming through Netflix is not HD content." "So there's really no loss for Wii consumers - the fact that they can't get HD content through our system", which was true in a lot of ways, but facts are that Netflix subscribers on the PS3 and Xbox 360 had access to over 1,000 HD titles! Tch! I'm sure Netflix wouldn't like to hear Reggie drag them through the mud like that. (... sorry, huh?) (He agreed with them?! What?!) Yeah, Netflix's spokesman totally agreed with Reggie, saying: ... wow. It is amazing to hear Netflix refer to one of their flagship products as 'underwhelming'. But this is part of the overall Netflix strategy, because you know what Netflix prized over being "best"? Being the most convenient, and it would be pretty nice for Netflix to have access to the over 26 million Wiis in the United States alone. So there was no extra fee, no HD, just an extra disc. Discs started shipping for the Netflix subscribers that connected their accounts to their Wii in March 2010. In just seven months, over three million people used a disc to connect their Wii to the wild world of Netflix streaming offerings! Oh wow, King of the Hill! Remember when that used to be on Netflix? But that didn't matter anymore, because in October 2010, Microsoft's exclusivity deal ran out, and PS3 and Wii subscribers were free to go disc-free. Yep, just POOF! Millions of discs rendered completely useless, overnight! Now floating in an ocean near you! By mid-2011, the most popular way to watch Netflix was on a computer. The second-most popular? The Wii! Netflix didn't even discontinue its streaming services on the Wii until January 2019! And that's when Nintendo shut down the whole eShop and Wii stuff, like... I don't think Netflix ever actually shut it down, Nintendo shut it down! Today Netflix is primarily a streaming service, though they still do ship DVD's if you're into that. At this point you can get Netflix on smart TV's, phones, Blu-ray players, probably your microwave, I don't know. It's wild to think how massive they've become in just over a decade, to the point where Microsoft and Google and others in the games industry are using THEM as an example of what they want to become! At the end of the day, did Netflix help anyone win the console war? I mean, there were a lot of small victories, but in the long term? No, not really. But did Netflix use the console war as a tool in its belt for its own global domination? Absolutely! And it's gonna keep getting more interesting, I mean, Netflix just for the first time ever lost subscribers like a month ago, and then Disney's makin' some moves right now, like... I dunno! Anyway, that's gonna wrap it up for now, thank you for watching Past Mortem, for watching Stop Skeletons From Fighting, I'm Derek, we have a Patreon, shout-out to our Patreon supporters, every single one of these people is awesome and they help support the show, you can join their ranks as well as the Discord, and get the podcast, get the activity feed, and get videos early by going to Stop Skeletons From Fighting on Patreon, support what you can, we appreciate it, and hey, if you like the video... like, subscribe... all that stuff, I gotta tell you to ring the bell 'cuz that's where we are right now, we did a video a couple 'o years ago on the Xbox 360 Red Ring of Death, you've maybe seen it, but if you haven't, check it out! This video is actually kind of like, sort of like a next chapter of that, like a little mini-chapter after that. Um... the next full chapter after that video might be comin' sometime down the line, but anyway, that's it for now, thanks for watching, see you again real soon.
Loved this channel since he was the HVGN
Because there were dvds