Netflix, the largest on-line rental service for DVDs in the United States, has announced it is developing a set-top box with LG Electronics to allow streaming of movies and other content directly from the Web to high-definition TVs.

"Internet to the TV is a huge opportunity," explained Reed Hastings, Netflix's founder, chairman and chief executive, in an official statement.

"Netflix 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."

A person with knowledge of the situation told Reuters that LG would likely embed the receiver into its $799 dual-DVD player, which supports the competing Blu-ray and HD-DVD high-definition DVD formats. Netflix already allows subscribers to stream a selection of films to their computer screens at no extra cost, but it's quite clear that most people would rather watch the content on their TVs. The company offers more than 90,000 titles on DVD and around 6,000 titles via the Internet.

"Our model is that we don't want one Netflix-branded box, we want to see 100 Netflix-capable boxes. We want to be embedded in high-def DVD players, Internet games, dedicated set-top boxes, a wide range of options, not all instantly. This is the first one, a great proof point," said Hastings to HackingNetflix.

"Consumers crave compelling and immediate content, and the Netflix online streaming movie feature can provide instant gratification," Ki Kwon, president of the consumer electronics division of LG Electronics USA, said in the statement.

Last month, Netflix had some problems with the U.S. Postal Service, which gave the company an ultimatum to change the mailer or charge an additional 17 cents a mailer in order to cover the additional costs of approximately $21 million a year that add up to the labor services – as every package requires to be manually handled.

However, Netflix could not afford to charge 17 cents a mailer that easily. It doesn’t seem much, but it has been calculated that it would reduce its income by 67 percent.