Stifel Nicolaus analyst Scott Devitt this morning upped his rating on Netflix (NFLX) to Buy from Hold, setting a $25 target price. Devitt notes that the stock is off 40 percent since late September, a period in which the S&P 500 is off 25 percent.

“In the current economy,” he writes, “Netflix’s value-oriented offering stands out to us as a compelling alternative to more expensive entertainment alternatives.” Devitt notes that the average Netflix customer paid a base of $13.60 a month–$163.20 a year–for two-at-a-time unlimited DVD rentals. By contrast, he notes that a night at a “Ticketmaster event” for a family of four on average runs $240. Take a family of four to the movies and ply them popcorn and soda, and you’ll pay $70. “Due to its relative value, we believe the Netflix existing subscriber base may remain more stable in the downturn and new subscribers could improve once the initial shock of the past few months subsides.”

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And so the company has begun offering a video-downloading service for its PlayStation 3 videogame console. Announcing the service at the gaming industry’s E3 conference in Los Angeles, Sony (SNE) said TV-show rentals will cost $1.99 per episode and movie rentals $2.99 to $5.99. Movie purchases will start at $9.99 and top out at $14.99. Not bad for content from Sony Pictures, Fox Film & Television (NWS), MGM (MGM), Lionsgate (LGF), Warner Bros. (TWX), Disney (DIS), Paramount (VIA) and Turner Entertainment (TWX). Certainly a compelling proposition for the 10 million or so PS3 users in the U.S., who no longer really need to buy an Apple TV (AAPL) or Netflix Player (NFLX) to deliver downloadable video to their TV sets.

Still, PlayStation Network’s video delivery service faces stiff competition from those rivals and from Microsoft (MSFT), which on Monday announced a deal with Netflix to stream movies over the Internet to the Xbox 360 game console. That said, Sony doesn’t seem much concerned with Microsoft, which it seems to view as a bit behind the curve. “The Xbox 360 is irrelevant in Japan, and in Europe PlayStation 3 sales have passed the Xbox 360,” said Peter Dille, senior vice president of marketing for Sony Computer Entertainment America. “We have a good dog fight in the U.S. but worldwide, when you look at a global footprint, the PS3 is the only console that can offer developers the ability to amortize costs over three markets. We’re looking at this as a marathon and we’re confident that the PlayStation 3 will win the crown.”

And so the company has begun offering a video-downloading service for its PlayStation 3 videogame console. Announcing the service at the gaming industry’s E3 conference in Los Angeles, Sony (SNE) said TV-show rentals will cost $1.99 per episode and movie rentals $2.99 to $5.99. Movie purchases will start at $9.99 and top out at $14.99. Not bad for content from Sony Pictures, Fox Film & Television (NWS), MGM (MGM), Lionsgate (LGF), Warner Bros. (TWX), Disney (DIS), Paramount (VIA) and Turner Entertainment (TWX). Certainly a compelling proposition for the 10 million or so PS3 users in the U.S., who no longer really need to buy an Apple TV (AAPL) or Netflix Player (NFLX) to deliver downloadable video to their TV sets.

Still, PlayStation Network’s video delivery service faces stiff competition from those rivals and from Microsoft (MSFT), which on Monday announced a deal with Netflix to stream movies over the Internet to the Xbox 360 game console. That said, Sony doesn’t seem much concerned with Microsoft, which it seems to view as a bit behind the curve. “The Xbox 360 is irrelevant in Japan, and in Europe PlayStation 3 sales have passed the Xbox 360,” said Peter Dille, senior vice president of marketing for Sony Computer Entertainment America. “We have a good dog fight in the U.S. but worldwide, when you look at a global footprint, the PS3 is the only console that can offer developers the ability to amortize costs over three markets. We’re looking at this as a marathon and we’re confident that the PlayStation 3 will win the crown.”

And so the company has begun offering a video-downloading service for its PlayStation 3 videogame console. Announcing the service at the gaming industry’s E3 conference in Los Angeles, Sony (SNE) said TV-show rentals will cost $1.99 per episode and movie rentals $2.99 to $5.99. Movie purchases will start at $9.99 and top out at $14.99. Not bad for content from Sony Pictures, Fox Film & Television (NWS), MGM (MGM), Lionsgate (LGF), Warner Bros. (TWX), Disney (DIS), Paramount (VIA) and Turner Entertainment (TWX). Certainly a compelling proposition for the 10 million or so PS3 users in the U.S., who no longer really need to buy an Apple TV (AAPL) or Netflix Player (NFLX) to deliver downloadable video to their TV sets.

Still, PlayStation Network’s video delivery service faces stiff competition from those rivals and from Microsoft (MSFT), which on Monday announced a deal with Netflix to stream movies over the Internet to the Xbox 360 game console. That said, Sony doesn’t seem much concerned with Microsoft, which it seems to view as a bit behind the curve. “The Xbox 360 is irrelevant in Japan, and in Europe PlayStation 3 sales have passed the Xbox 360,” said Peter Dille, senior vice president of marketing for Sony Computer Entertainment America. “We have a good dog fight in the U.S. but worldwide, when you look at a global footprint, the PS3 is the only console that can offer developers the ability to amortize costs over three markets. We’re looking at this as a marathon and we’re confident that the PlayStation 3 will win the crown.”