American DVD rental company Netflix has announced it is developing a set-top box with LG that will stream movies from Netflix's online database.

Netflix, that currently boasts around seven million subscribers in the States, sees this as a solution to extend its online movie rentals - which lets subscribers watch about 6000 films and TV episodes - from the PC right into consumer's lounges.

The hardware is expected to reach the market in the second half of 2008 in the form of a networked version of LG's dual-format player, giving consumers Blu-ray, HD DVD and a large library of online titles.