Netflix enlists LG for set-top boxes


Netflix, the company that made DVD rentals a subscription service for millions of Americans, is partnering on set-top boxes that will deliver movies directly to television screens.

First up is a deal with LG Electronics, though details were sketchy late Wednesday. Ultimately, Netflix intends its service to be embedded in dozens of devices, including cable set-top boxes, video game consoles and Internet-enabled TV sets.

Netflix CEO Reed Hastings said the LG Electronics box is due in the second half of the year, though he would not speculate on the price. Some observers were guessing Wednesday that it would be worked into the LG Electronics dual next-generation DVD player that plays both Blu-ray and HD DVD and sells for about $800.

Indeed, the service is primarily aimed at, but not limited to, high-definition TV households. Although it will stream movies and TV shows on demand from the Internet, it's expected that users will not have to interact with their computers in order to access the content.

Netflix already has a service it calls Watch Instantly, whereby 6,000 titles can be chosen by subscribers who wish to watch them almost instantaneously, though on computer screens and not their television sets. Netflix offers 90,000 titles the old-fashioned way, via DVD.

Hastings said his intention is to offer the service to subscribers at no additional cost beyond what they pay now for DVDs and Watch Instantly.

Netflix has been hinting for several months that it intended this year to disclose plans for moving Watch Instantly to TV screens. Hastings said Wednesday that the company had considered creating its own set-top box to do the trick and even hired Anthony Wood, a ReplayTV co-founder, to spearhead the project. In the end, he opted instead to partner with LG Electronics and, presumably, several others yet to be named.

"Our partnerships came together so well that we shelved that plan," Hastings said. "Once you have a streaming model without the need for storage, you can be in lots of devices."

Netflix, though, is entering a crowded space of recent entrants and failed experiments. In the latter category is MovieBeam, which Disney and others spent more than $50 million on before unloading it for less than $10 million to Movie Gallery. Last month, Movie Gallery halted its MovieBeam service.

Faring better is with its Unbox service that lets users watch on-demand content on TV screens, provided they have a broadband-enabled TiVo box.

Apple also has entered the fray with Apple TV, a $300 box that lets users play iTunes content on their TV sets. Apple reportedly intends on getting into the rental business with its Apple TV also, with details due late this month.

Other participants in the nascent industry include, to varying degrees, Bongo, Vudu, Hulu and CinemaNow.

Several years ago, Netflix was negotiating a plan using TiVo to deliver movies to TV screens, but Hastings said Wednesday that those talks are no longer active.

"We worked with them for a while, and they're great guys, but their technology doesn't overlap with ours at this time," Hastings said. "But I wouldn't rule it out in the future."

In the meantime, Blockbuster is also working on a solution for delivering movies from the Internet to TV screens on demand.

Like Netflix, it already delivers them to computer screens — in Blockbuster's case through its Movielink acquisition.