Netflix, consumer electronics partnerships near

LOS ANGELES Tue Apr 22, 2008 10:05am EDT

Reed Hastings, CEO of Netflix Inc., the online DVD-rental service, holds several DVDs as he poses at the Netflix offices in Beverly Hills, California in this December 8, 2005 file photo. REUTERS/Fred Prouser

Reed Hastings, CEO of Netflix Inc., the online DVD-rental service, holds several DVDs as he poses at the Netflix offices in Beverly Hills, California in this December 8, 2005 file photo.

Credit: Reuters/Fred Prouser

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LOS ANGELES (Reuters) - U.S. online DVD rental company Netflix Inc on Monday said it expects to soon announce three partnerships, similar to its set-top box alliance with LG Electronics Inc, that will let subscribers watch films streamed directly from the Web to TVs.

"We have LG plus three additional partners actively working on integrating our technology into their products," Chief Executive Officer Reed Hastings said on a conference call with analysts.

"Three of the four partners are major companies, which each sell millions of devices per year and will enable the Netflix functionality in some of those devices likely in the fourth quarter of this year," he said.

"The fourth partner is a small company, which will likely launch sooner than Q4," he said.

Netflix, with over 8 million subscribers, is looking to extend its Internet movie delivery feature -- which lets subscribers play back about 9,000 films and TV episodes on PCs -- to the television.

In January, Netflix, the leader of online DVD rentals, said it will roll out a new device via an LG-networked player sometime in the second half of 2008.

Like Netflix's PC instant viewing feature, the online TV streaming feature would be included in all of its various price plans, generally ranging from $4.99 to about $16.99 a month, at no extra charges. About 90,000 titles are available through the Netflix online mail order service.

The promise of increased Web video viewing has lured many companies, from Apple Inc to Amazon.com Inc, into the sector.

Hastings said that despite Netflix's success at attracting major partners, these partnerships only demonstrate its success at providing Web-delivered content to its subscribers at no additional charge. He said nothing about these agreements will be material to Netflix's financial results for the foreseeable future.

Earlier, Netflix posted lower quarterly profit margins as it increased spending for online content.

Netflix officials on the call said they expect gross margins to remain steady for the calendar year with a slight uptick in the fourth quarter, despite the increased costs for Web-delivered films and a postage rate hike of 2 cents per round trip mailer beginning next month.

(Editing by Gary Hill)

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