Engadget notes that Netflix is developing movie set-top-box with LG, slated to launch sometime in Q2. The networked player would purportedly allow owners to stream in movies for viewing on their television, and it’s being reported that the feature would be “included in all of its various price plans… at no extra charge.”

This appears to come into direct opposition to reports that Apple will be announcing iTunes movie rentals at Macworld San Francisco 2008, which kicks off on January 15th. Variety reports that Apple has already sealed the deal with Twentieth Century Fox as well as Disney, however, rental costs are per movie, and speculated for 24 hour periods.

The major cable companies already have the iTunes business model in place (movies on demand), but have been rumored to be planning HD subscriptions services similar to Netflix. If this is indeed the case, heavy competition might develop later this year.

Netflix is looking like a real winner unless greater market competition is developed, especially if you consider the convenience and cost factors customers have to choose from. Blockbuster has suffered immensely by the success of Netflix with no positive prospects for future growth, and cable companies show little movement for immediate innovation. Without the support of all major studios, I suspect even Apple will only find moderate success. In any case, it should be an interesting year to watch the home entertainment industry.

Additional coverage by Reuters, the Associated Press, and The New York Times.

Filed under: Movies