Netflix partners with LG on streaming movie device

The movie rental service has decided to abandon its plans for its own set-top box, instead opting to offer its platform through a new device to be manufactured by LG.

A networked set-top box player will make its debut at CES 2008 next week, while actual retail rollout is slated for the second half of this year. The device provides Netflix a delivery method that would allow it to move beyond the computer screen as its current streaming movie offers.

Netflix chief Reed Hastings calls connecting the Internet to the TV "a huge opportunity" for the company. It also said that while it had looked into entering the set-top box market on its own, doing so with a major electronics manufacturer seemed like a more viable alternative.

By the time the Netflix-LG device makes it into the market, however, it could be looking at a crowded field. Vudu, which launched in September, will likely already have a solid footing, and other companies are currently exploring their options.

"Bottom line, it's a logical step for Netfilix to take but they're going to face a lot of competition for the hearts and minds of consumers," Jupiter Research analyst Michael Gartenberg said. "More importantly, they've got to overcome the technical hurdles that have tripped up so many players to make this viable to the mass market."

The company believes that its move is simply the next step for its distribution strategy, which aims to provide its seven million plus members multiple methods on which to use the Netflix service -- whether it be online, through the mail, or on their televisions.

"The strategy [to offer streaming as a service rather than its own set-top box] makes a lot of sense in limiting risk and maximizing exposure. After all, which companies wouldn't want Netflix on their Internet-connected television devices?" industry watcher Dave Zatz wrote Thursday.

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