Netflix and South Korean electronics giant LG announced an agreement late yesterday to develop a set-top box that will allow Netflix customers to download movies directly to their high-definition TVs.

The online DVD-rental giant has already implemented a "Watch Instantly" feature that allows users with PCs who use Internet Explorer as their web browser to watch streamed films on their computers. Since many "early adopters" of new technology prefer the experience of watching movies on their HDTV sets, this is the logical next step, and is likely to further pressure the already-shrinking DVD market.

With more than 7 million registered users, Netflix's new content delivery stream will put pressure on the high-definition DVD market, which is currently bogged down in a format war between HD DVD and Blu-ray. The LG box will compete directly with those players and their discs.

The new Netflix-enabled LG player is scheduled for release during the second half of this year, according to the announcement.

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