LG Electronics today announced its first broadband-enabled high-definition televisions with Netflix streaming software embedded directly in the TV sets to stream its library of movies, TV episodes and HD content. With no set-top box (STB) needed, Netflix members can stream content directly to these Broadband HDTVs via an embedded Ethernet connection. While the Ethernet connection could provide access to the open Web, LG stopped short with Netflix and the promise of more partners to come.

Netflix began offering its instant streaming functionality on the PC in January 2007 and has a stated goal of equipping all home-entertainment screens with its instant movie-viewing capability. The service is also embedded in Microsoft Xbox 360 game consoles, Blu-ray DVD players and other STBs. LG is the first to partner with Netflix for streaming video, but it joins other manufacturers in offering walled-garden broadband-enabled sets. Panasonic offers its line of Viera TVs that include an HDMI and Blu-ray cable connected to the TV, and Sony also has Bravia Internet Link TV sets. LG said it plans to add additional streaming partners, although it hasn’t disclosed any specifics.

While at launch, the TV sets will only support Netflix from the Web, broadband-connected TVs have the potential to offer open Web browsing. Most processors, however, aren’t yet up to speed. This would require a browser and significantly more processing power to support the user interface. Further, for it to be a truly compelling service, it might also require a keyboard or updated remote control, according to Jonathan Hurd, director at Altman Vilandrie & Co.

“Like with iTunes and the iPod, people have shown they are willing to buy them in droves if that one service they are locked into is a great service,” Hurd said. “A concern is the combination of whatever LG has in hardware and whatever Netflix has in software -- does it work extremely well together? If the answer is no, people will clamor for something different. If it works extraordinarily well, people will love it.”

While the announcement is significant, Hurd doesn’t see physical media going anywhere anytime soon. More and more consumers will use OTT video services like Netflix for the convenience factor, but the quality of Blu-Ray disks has yet to be matched. If LG implements Netflix in a way that the service and the user interface are harmonized, much like Apple’s iPod and iTunes, it could be successful, Hurd said. Ease of use and the search and browsing experience will determine if broadband-connected TVs are adopted.