The PlayStation 3 is going Netflix next month. The second console to get the streaming video service, this added functionality should help the PS3 sales for the holiday (which are already predicted to be high due to the lower price point of the PS3 Slim). The solution currently works using a disc shipped out from Netflix, though it's been confirmed that eventually a native client will be released. There are still rumors of a similar disc-based approach coming to the Wii.
The Xbox 360 just saw the release of Sky TV on the system for Sky subscribers in the U.K. This service has one up on the Netflix services already being used by Xbox 360 users in the U.S.: live TV. A number of Sky channels are available for live streaming to the system, including sports. And there's an on-demand content library. The Xbox 360 is also getting 1080p HD streaming for "Zune Marketplace" video content, with a system update coming next month (assuming a download speed of 8Mbps and an HDMI connection). This will apply to purchased and rented content within the video marketplace, and replaces the existing download method.
These trends in the consoles mirror a larger trend among consumer behavior. Streaming of full-length TV or movie content is on the rise in the U.S., increasing by about 100% year to year. For the general population, 26% have streamed a full-length TV episode in the last month (up from 11% eight months prior), and 51% of 18- to 24-year-olds have (up from 26%). These numbers mirror streaming growth reported on Netflix's earnings call this quarter, with 42% of subscribers viewing instant stream content today versus only 22% last year. As the ease of use and quality increase for streaming content to the living room, this behavior will likely continue to spread - and, at least so far, the consoles are sitting at the forefront of this transformation.
(Full disclosure: Josh Lovison works for the IPG Emerging Media Lab, which works with Universal McCann. Both Microsoft and Sony are agency clients. He also owns stock in Netflix.)