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LG, Netflix Sign Streaming Video Deal

1/02/2008 11:01:00 PM Eastern

Englewood Cliffs, N.J. — LG Electronics agreed to jointly develop a set-top box with mail-order DVD-rental provider Netflix to provide thousands of Internet-streamed video movies and programs to TV screens virtually on demand.

The new hardware and service, which is planned for delivery in the second half of 2008, will eliminate the need to use a PC to view Netflix’s streaming video movies and other programming. The company started offering a similar streaming video service for PC users last year.

A screen shot of the service.

Like that service, the streaming video service for TVs will be offered free of charge to Netflix members, who can rent DVDs via mail or now stream videos over the Internet to PCs and later TVs. Memberships are available for a range of prices from $4.99 to $34.99/month. The larger the fee paid, the more monthly hours of viewing time are available for streaming videos.

An LG spokesman said the relationship could eventually lead to the development of LG TVs with built-in access to the streaming video content, but no such announcements had been planned at this time.

LG is the first company to announce plans to offer the new streaming service for TVs, although Netflix said it intends to work with other manufacturer partners as well.

“Consumers crave compelling and immediate content, and the Netflix online streaming movie feature can provide instant gratification,” stated Ki Kwon, LG Electronics USA CE division president. “This alliance underscores LG’s goal of developing smart technologies that deliver flexibility, convenience and control to consumers.

LG said the jointly developed system will support “the Netflix core strategy of offering a multi-dimensional, or ‘hybrid,’ service that gives its more than 7 million members a variety of ways to receive movies and TV series for one, low monthly fee.”

Los Gatos, Calif-based Netflix said it has a growing selection of over 6,000 movies and TV episodes available for its streaming video services. Most titles available for streaming are older content. The most viewed streaming content on the PC service so far have been select episodes of the “Heroes” TV series, Netflix said.

“Internet to the TV is going to be a huge market,” stated Netflix chairman and CEO Reed Hastings. “Netflix explored also offering its own Netflix-branded set-top boxes, but we concluded that familiar consumer electronics devices from industry leaders like LG Electronics are a better consumer solution for getting the Internet to the TV.”

LG was not ready to announce exact feature specs or output resolution levels of the set-top device. Current Netflix streaming videos are offered in near DVD resolution quality. LG plans to give invited dealers a demonstration of prototype equipment behind closed doors at International CES, according to a Netflix spokesman.

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