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Netflix earnings during the second half of the year will continue to rise as more owners of Microsoft Xbox 360 videogame consoles sign up for Netflix's video-streaming service, one analyst wrote today. The increase in subscriptions to the rental service is because of more features being made available to gamers looking to stream movie titles from Netflix.
About 500,000 Xbox Live subscribers added Netflix's video-streaming service during the second quarter, Wedbush Morgan analyst Michael Pachter wrote in a note to clients today. Pachter also wrote that growth in the number of Xbox Live members subscribing to Netflix's streaming service will accelerate during the second half of the year.
Netflix, which entered into an exclusive agreement last year to make Xbox the only games console to be able to play Netflix's digital titles, has been trying to augment growth in subscribers to its DVD-by-mail service by broadening the number of electronic components that allow for subscribers to play Netflix's inventory of more than 12,000 digital titles directly on television sets. Earlier this month, Netflix added Sony Bravia TVs to a list of components that can stream Netflix's titles on TVs. Others include TiVo digital video recorders and Samsung Blu-ray Disc players.
"It is clear that Netflix is gaining traction with its streaming initiative," wrote Pachter, adding that streaming activations by Xbox users "will help [Netflix] subscriber growth, lower subscriber-acquisition costs, limit churn and drive gross margins higher, as a greater number of subscribers begin to substitute streaming for physical DVD rental."