Long rumored, finally here. Netflix is coming to the Xbox 360.

Xbox 360 owners and Live Gold members who are also Netflix subscribers will be able to stream online movies to their consoles at no extra cost. Netflix is the world’s largest DVD rental service.

The Xbox becomes the only game system that lets users immediately watch movies and TV shows steamed from Netflix. Along with the existing Xbox LIVE Marketplace Video Store, the Xbox 360 has more access to movies and TV shows on demand than any other device connected to the TV, according to Microsoft.

Xbox owners can also share Netflix movies with friends via Xbox LIVE party so you can watch “Super Bad” together. This will require an Xbox Gold LIVE account however.

There’s no word at the quality of the streamed content, but we guess it will be DVD quality, not high-def.

The service launches in the fall with the Xbox’s new dashboard. Limelight Networks is providing the Content Delivery Network for the new Xbox-Netflix partnership.

The partnership is significant, notes Paul Jackson, a Forrester Research Inc. analyst in London. “In the future everything is going to downloads,” he said [via Bloomberg]. “It’s ludicrously inefficient to ship all those silver disks.”

Reed Hastings, Netflix CEO, told Bloomberg, “We’re definately building up a big head of steam. 2008 and 2009 are strategic investment years. By 2010 we’ll be able to maximize revenue and profits.

“Our key competitive strength is our ability to combine [downloads with Netflix’s DVD-by-mail service],” he said.

Dashboard makeover

Speaking of the dashboard, Microsoft announced at the E3 Media and Business conference that the Xbox 360 will be getting a total overhaul this fall.

New features will include fancy Mii-like 3D avatars popular on the Nintendo Wii game console and an improved emphasis on community with IM, video chat, and photo sharing. Gamers will be able to chat with up to eight friends simultaneously and form LIVE parties.

The avatars will be integrated into Web sites and upcoming games such as Uno Rush, which is a nice touch. One of the best-loved features of the Wii are the Mii avatars, so when you are playing a game you actually see some representative of a family member or friend, rather than your sister choosing the punk-rock-chick avatar that means nothing except that sis might like The Clash.

“When people turn on their Xboxs this fall they’ll get an entirely new interface and dashboard, an entirely new Xbox through the magic of software,” said John Schappert, head of LIVE services.

Taking cues from Nintendo and Sony, who is working on the Home aspect of the PS3, isn’t a bad idea for Microsoft and the Xbox.

Photo credit: Engadget

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