Netflix box will bring Internet video to HDTVs

SAN FRANCISCO -- The straight-to-TV service, due in the second half of this year, would be the most direct way yet for Netflix's 7 million members to view movies and TV series. For a year, Netflix users have been able to stream content to their PCs. They can also rent videos from Netflix's website, for home delivery of DVDs.

"The potential is huge over the next 10 years," as millions of Americans snap up HDTVs and increasingly pipe Internet content straight to them, says Netflix CEO Reed Hastings.

Hastings said Netflix considered building its own set-top box but decided to go with LG Electronics, a major force in the U.S. digital TV market. He said the set-top box's price has yet to be determined.

Netflix's announcement caps a flurry of moves by key players in the $1.2 billion market for online DVD rentals.

"This could shape up to be a boxing match between Apple and Netflix over video streaming content to TVs and PCs," says Michael Olson, an analyst at Piper Jaffray.

For Netflix's set-top box to succeed, it needs to cost about $100, with a monthly subscription rate of $12 for rentals of two to three titles at a time, Olson says.