LG making HD box for Netflix that plays Blu-ray and downloads too

LG Electronics will soon offer a black box that plays hi-def Blu-ray discs plus video streamed over the Internet from Netflix, in the latest move by Netflix to deliver movie rentals online rather than through the mail.

The new product, the LG BD300 Network Blu-ray Disc Player, will go on sale in the US.in September for "well under $500" according LG. In addition to playing movies in the Blu-ray format, it will have a jack on the back for connecting to a home network. Movies can be accessed from Netflix and other forms of programming from other sources.

The unit is part of a wave of electronics devices from Apple, Microsoft and others enabling video delivered over the Internet to make the leap to televisions from computers. The growing online availability of TV shows, movies and other mainstream programming could eventually pose a challenge to more traditional delivery of television through cable and satellite.

Best known for using red envelopes to mail DVD rentals to homes, Netflixhas cut a series of deals recently to stream movies over the Internet to TVs, a method that begins playing movies almost immediately and doesn't make permanent copies of videos for users to keep. The company recently announced plans to stream movies to Microsoft's Xbox 360 videogame console later this year, and since May has been doing the same through a $100 set-top box made by Roku.

Netflix's Internet-streaming service from these and the LG product will be available at no additional charge to subscribers to Netflix's DVD-rental service, as long as customers are on rental plans that cost at least $8.99 a month. The picture quality of streamed movies is comparable with a DVD, though will fall short of the superior images that users of the LG product will get from Blu-ray disc movies. Netflix believes users will accept the lower quality in exchange for instant gratification over the Internet.

The other big drawback of the Netflix streaming service is that only 12,000 titles out of a total library of more than 100,000 on DVD are available over the Internet, due to restrictions by movie studios. (info from The Wall Street Journal)