Looking to extend beyond DVD rentals, Netflix has announced that they are developing a set-top box in conjunction with LG Electronics to let subscribers watch movies streamed directly from the Internet to their television sets. Netflix subscribers can already play back approximately 6,000 movies and TV episodes on their computer systems via a web browser. According to Netflix, the online TV streaming feature would be included in all of its price plans at no extra charge.

This move is a logical next step for Netflix. Offering Internet video streaming straight to television sets will certainly help Netflix hold onto their existing customer base while attract potential new customers. This also happens to be a space with no clear leader at the moment. Even vendors such as Apple and Microsoft are having trouble gaining traction.

The Netflix online TV streaming capability is likely to be embedded in an upcoming LG dual DVD player which will support both Blu-ray and HD DVD and cost approximately $799. According to Netflix CEO, Reed Hastings, the LG partnership will be the first of many such partnership deals. “We’d like to see a hundred Netflix-capable boxes” he said.

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