Netflix has dropped plans to sell its own Internet TV set-top, and instead will work with LG Electronics to develop a device to let subscribers of the DVD-by-mail service watch movies and other programming delivered via the Internet on their TVs.
The companies said an LG set-top box with the Netflix software is expected to be available in the second half of 2008. No pricing was given for the LG player, but access to movies and TV shows from Netflix will be included as part of standard subscription packages.
Netflix CEO Reed Hastings, in a prepared statement, said the company "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."
According to Netflix, vice president of Internet TV Anthony Wood -- the founder and CEO of digital video recorder startup ReplayTV, whom Netflix hired last year -- will be leaving the company.
Such "Internet-to-the-TV" devices, which are a potential threat to cable video services, have failed to catch on in any significant way. Last year Akimbo Systems threw in the towel on a proprietary broadband-connected set-top device it created with RCA, and MovieBeam, which had signed up just 1,800 customers for an over-the-air video rental service, shut its doors.
Internet TV set-top boxes still in play include Apple TV, Microsoft's Xbox 360 game console and TiVo, which has a deal with Amazon.com to offer downloads to customers, along with devices from startups including SyncTV and Vudu.
Netflix said delivering movies and TV shows over the Internet to television sets is part of its strategy to offer a "multidimensional" service that provides a variety of ways to receive video entertainment for a single monthly fee.
Netflix began offering streaming movies and TV series to members' PCs last year, with a feature called Watch Now. Currently Netflix offers "a growing selection" of more than 6,000 movies and TV episodes over the Internet compared with 90,000 DVD titles available through the mail. The company has 7 million subscribers.
Hastings said the LG partnership was the "first of many" that Netflix expects to announce this year with manufacturers of consumer electronics devices, including videogame consoles, The Wall Street Journal reported.