New York (NY) – LG today said that it will introduce a new Blu-ray player that will come with Netflix streaming capability out of the box. LG lately has been much more aggressive than most of its rivals in adopting new and bridging multiple technologies, so this new player makes a lot of sense for the company. But, we wonder, does this new player also offer an offlne-online HD format battle in a box and what does this all mean for Blockbuster?

LG said that its BD300 Network Blu-ray disc player, due this fall will be capable of connecting to the Netflix online movie streaming service. The feature will be offered free of charge. However, a Netflix subscription is required to access the database of about 12,000 movies.       

According to LG, Netflix members will use the Netflix Web site to add movies and TV episodes to their individual instant Queues. Those choices will automatically be displayed on members' TVs and available to watch instantly through the LG player. Once selected, movies are promised will begin playing in as little as 30 seconds. An included remote control can be used to browse and make selections on the TV screen and also have the ability to read synopses and rate movies. In addition, users will have the option of fast-forwarding and rewinding the video stream.

The LG announcement is Netflix’ second huge coup this month, following news that the service will be available through Xbox 360 Live Gold, a subscription based service. It seems that Netflix may have captured enough audience to make the service an attractive feature for consumer electronics companies such as LG. The online movie subscription service said that it has now a subscriber base of 8.4 million customers.

Deals like this, of course, bring up the question what is happening with Blockbuster’s competing Total Access service. The company recently proposed to acquire Circuit City to extend its reach, but withdrew its offer earlier this month. According to its first quarter earnings report, online subscriptions accounted for $163.7 million of the company’s $1.39 billion in Q1 – and more than one third of the company’s in-store rental revenues of $468.0 million. While the number of subscribers was not disclosed, the company indicated that it is struggling to move subscribers from low-profit subscriptions to higher-profit subscriptions and is losing a “significant” number of customers in the process. At this time, Netflix appears to be ahead of Blockbuster, and it is clear that Blockbuster will need to strike similar deals to be able to catch up.

Last year, LG combined the now defunct HD DVD format and Blu-ray capability in one device. Some industry watchers now expect that Blu-ray will have to battle online services in a new stage of a high-definition war and the BD300 may be the first device that will enable a direct side-by-side view how these two models work and evolve.  

We are also quite certain that the LG announcement will cause strategy meetings at broadband Internet providers. Since bandwidth restrictions are an open discussion right now and these movie streams will demand a lot of bandwidth, we should expect to hear about some creative new pricing plans from Comcast, Time Warner, AT&T & Co. soon.