Game over: Netflix frags game rental idea

Netflix CEO Reed Hastings says his company currently has no plans to get into video game rentals, despite saying it was considering it just months ago.

Another Netflix idea has bit the dust.

The company's CEO Reed Hastings said yesterday during an earnings call that Netflix has "no plans to enter video games," scuttling hopes that it would follow through on an idea it floated last year to provide game rentals to its customers.

Back in September, Netflix CEO Reed Hastings announced plans to spin off his company's DVD-by-mail business into a new company , called Qwikster. As part of that plan, Hastings said that Qwikster would let customers rent Xbox 360, PlayStation 3, and Wii titles. Just a few weeks later, Netflix announced that it would not, in fact, spin off its DVD-by-mail business, but said that it would still consider offering game rentals .

Now that Hastings has officially shelved the idea, GameFly will remain the only major online service provider offering game rentals. That company, which offers both older titles and the latest releases, has two plans available to gamers, allowing them to rent one or two games at a time. The one-game plan costs $15.95 a month, while the two-game option costs $22.95 a month.

Exactly why Netflix decided against game rentals is unknown, and the company has not immediately responded to CNET's request for comment on the matter. However, it might be due to the higher price it would have been forced to pay to buy games to rent. The typical DVD might go on sale for $20 or $30, while a video game usually retails for $60. Although Netflix doesn't pay retail prices, the company would have inked deals with publishers that would have likely cost much more than its movie-acquisition arrangements. And at this point, incurring more expenses is not something Netflix is trying to do.

Netflix yesterday announced stronger-than-expected fourth-quarter financial performance. The company said that it generated $876 million in revenue during the period, and earned a profit of $40.7 million.

 

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