Analyst firm Wedbush Morgan is predicting that Netflix has either already partnered or will partner with Microsoft to expand its online streaming capabilities soon.

This assumption is based on comments at a Wednesday Netflix analyst event suggesting the online video rental service’s focus on “internet-enabled video game consoles,” and a report in March in which a Netflix spokesman admitted that the company has recently polled its users on their potential interest in receiving streaming movie content via the Xbox 360. Plus, in its Q3 2007 call to analysts in October, Netflix said that it would consider delivering movies to its subscribers via internet-connected HD-DVD and Blu-ray devices, which include the Xbox 360 and PlayStation 3. Netflix has also been touting its upcoming “Watch Instantly” feature, which offers its free streaming service with its overall service package to DVD-by-mail subscribers.

So the cyber-writing is on the cyber-wall, so to speak…cyberly.

 
“While there are three such consoles, only one (Microsoft's Xbox 360) has a sufficiently large installed base to make sense from a streaming partnership with Netflix,” notes Wedbush Morgan’s Michael Pachter. “The competitive advantage of such an alliance is clear: Netflix customers who are Xbox Live members will have the ability to stream online content through their Xbox 360s directly to their televisions. The ability to do so is available without the Xbox 360, but requires a measure of technological sophistication and a high tolerance for failure. In our view, free streaming video is such a differentiated service, and Netflix can gain a competitive advantage by building an integrated product offering.”

Gamasutra.com: Netflix, Microsoft To Partner For Xbox 360 Video Delivery?