NICK WINGFIELD - July 31, 2008South Korea's LG Electronics Inc. will soon offer a device that plays high definition Blu-ray movies along with video streamed over the Internet from Netflix Inc., the latest move by Netflix to deliver movie rentals online rather than through the mail.
The new product, dubbed the LG BD300 Network Blu-ray Disc Player, will go on sale in the U.S. in September for "well under $500," according to Allan Jason, vice president of sales and marketing for digital media products at LG's U.S. division. In addition to playing movies in the high-definition Blu-ray format being pitched as a successor to DVDs, the product will have a jack on the back for plugging into a home network. Movies can be accessed from Netflix and other forms of programming from other sources.
Netflix and LG first announced a partnership in January, but they hadn't discussed a specific product.
The LG product is part of a wave of electronics devices from Apple Inc., Microsoft Corp. and others enabling video delivered over the Internet to make the leap to televisions from personal 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, Netflix, of Los Gatos, Calif., has 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 Inc.
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. Reed Hastings, chairman and CEO of Netflix, believes users will accept the lower quality in exchange for instant gratification over the Internet.
"The most appealing part of it is the instant you click you get to watch," Mr. Hastings said.
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. Josh Martin, an analyst at research firm Yankee Group, said the better selection of movies on disc formats compared with the Internet is likely to continue for years to come.
"The technology is already there but the business models are not," Mr. Martin said.
originally posted in: http://online.wsj.com/article/SB121747437464399925.html?mod=hps_us_at_glance_technology
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