Seeking Alpha
Profile|
( followers)  

In October of 2007, Netflix (NASDAQ:NFLX) CEO Reed Hasting spoke to analysts about convergence and digital movie distribution. In the remarks, he defined three long-term goals for the company: “to expand the content [Netflix] offers online,” “to make it inexpensive and easy for consumers to view that content on the television,” and last, “to understand what the financial model for the hybrid service will be in the long term.” Throughout 2008, the company made progress on all three, especially one and two. Heading into 2009, the company looks poised to keep pushing forward.

Monday, Netflix mirrored a product announcement made at the same time last year, again partnering with South Korean electronics giant, LG (NYSE:LPL).

The first time around, the companies joined up to promote an LG “set top box” configured to receive streamed Netflix “Watch Now” on-demand programming. That turned out to be a Netflix-enabled LG Blu-ray player (revealed in July).

This second time, though, the companies are pushing out a TV product line with the technology embedded on board. The companies have confirmed they will be showing examples from the LCD and Plasma lineup at the Consumer Electronics Show later this week.

As with other “Watch Now” devices, the TVs will allow owners who have an existing Netflix membership to stream an unlimited amount of programming straight to their televisions. Beyond Netflix’s standard monthly membership dues (for mail-order DVD delivery), and the hardware cost, there is no additional charge to use the service.

Also similar to other Netflix-enabled devices, the TVs don’t appear set to allow direct surfing of Netflix’s website through a TV web browser/interface. For customers to watch movies on-demand, they will most likely need to go online through their computer and fill up a queue of programs first. When it’s time to watch, the TV’s controls will allow selections from that queue, along with basic video controls like play, pause, fast forward, etc.

The existing Netflix-integrated product family is currently comprised entirely of external devices. These include the Xbox 360, an LG Blu-ray player, a partnership with TiVo (NASDAQ:TIVO) and Roku’s Netflix player. The LG TVs will be the first standalone products that require no added connections or wiring (besides an Internet connection).

Netflix's Reed Hastings said in a statement, “LG Electronics was the first to embrace Netflix as a streaming partner a year ago, and was first in 2008 to introduce a Blu-ray player that streams movies from Netflix. So it’s fitting LG is the first to introduce Netflix instant streaming directly to the TV.”

LG USA president Teddy Hwang called the deal “a natural progression.” Mr. Hwang is right. LG is the first, but it is safe to bet they won’t be the last.

Hastings has said in the past that the company “want[s] to see 100 Netflix enabled devices on the market.”

More integrated TV partnerships are likely to be announced later this year. Samsung (SSDIF.PK)? Sharp (SHCAY.PK)? Toshiba (TOSBF.PK)? maybe Panasonic (PC)? … By the second half, I’d bet for one or two more announcements.

The LG TVs are scheduled to ship this spring.

Source: LG First to Launch TVs with Streamed Netflix Programming