Richard Doherty, research director of the Envisioneering Group, a market research firm, said Netflix’s model had the virtue of being free to existing subscribers and relatively easy for consumers to understand. “You’re already a subscriber and you don’t pay anything extra. That’s called a slam dunk in most businesses we follow,” Mr. Doherty said.

The companies said LG products with Netflix’s movie service would begin shipping in the second half of this year. They did not say which devices would have it.

Mr. Doherty, who was briefed on the Netflix announcement and LG’s other plans to be unveiled at the Consumer Electronics Show in Las Vegas next week, said LG could integrate the Netflix service into a future version of its dual-mode HD DVD/Blu-ray DVD player, which now sells for $799, and a new line of high-definition TVs with wireless connections to the Internet, among other products.

Mr. Hastings said the new service would combine the benefits of an Internet browser with the luxury of watching movies and TV shows on large, high-definition TV screens. He said subscribers would be able to go to the Netflix Web site to create lists of movies they wanted to see. The Netflix service on the TV would offer a simple way to watch those movies.

“We think we have solved the real fundamental problem, which has been that choosing movies on a television has been extremely challenging,” Mr. Hastings said. “Video-on-demand companies worked at it for a long time, but choosing movies on the TV just doesn’t have the power of the Web.”

The Netflix streams will not initially be in high definition, and there are some limits to how many programs customers can watch. For example, customers who pay Netflix’s most popular $17-a-month rate are allowed 17 hours of viewing on their PCs, though a spokesman said the company had been experimenting with unlimited digital viewing.

Netflix says it is able to offer the online service free to subscribers because when customers watch online, the company does not have to spend the money to mail them a DVD.