Online movie rental service Netflix has teamed up with LG to develop a set-top box to stream movies and other programming to TVs over the internet.

The collaboration is expected to deliver a new online home entertainment service via an LG networked player planned for the second half of 2008.

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

"This alliance underscores LG's goal of developing smart technologies that deliver flexibility, convenience and control to consumers."

Netflix claimed that the deal forms part of its 'hybrid' service, which provides seven million members with a variety of ways to receive movies and TV shows for a single monthly fee.

The company currently offers a wide range of content via its mail service and streamed over the internet to users' PCs.

Once the LG set-top box becomes available, subscribers will be able to watch movies streamed from the Netflix website directly on their TVs.

"Internet to the TV is a huge opportunity," said Reed Hastings, founder, chairman and chief executive at Netflix.

"Netflix explored offering its own branded set-top boxes but concluded that familiar devices from industry leaders like LG are a better solution for getting the internet to the TV."

The idea is gaining popularity in many circles. Several ISPs already offer similar video-on-demand services streamed directly to the TV, and companies like Apple and DivX offer similar services in which content is streamed to the TV via the PC.