Netflix Without the DVD: Now Integrated Within XBox; Also NBCU Shows on XBox

After its Roku box integration, which received critical acclaim for ease of use, Netflix (NSDQ: NFLX) is continuing on its digital service integration within others: it has just announced a deal with Microsoft (NSDQ: MSFT), where Xbox 360 will be able to stream thousands (well 10K, compared to its DVD collection of over 100K) of movies/videos onto their TV sets…The service will be free to Xbox Live Gold members who are also Netflix subscribers.

Xbox had its own movie collection for streaming and download, but not as many….this surely gives it another boost on its fierce competition with Sony’s PS3. XBox has about 12 million users, so this also give Netflix a big user base, though of course with some duplications. Then of course there’s Apple (NSDQ: AAPL) TV, which competes with these combo services. As an aside, Netflix CEO Reed Hastings is a member of Microsoft’s board, so that helps…

Then, Xbox/MSFT has also tied up with NBC Universal (NYSE: GE) to offer the media company’s TV shows and movies on its Xbox Live online platform. More details in release.

VB: The two services will also now offer a Live Party feature which will allow users to watch movies together over Xbox Live virtually.

Also, separately, prior to E3, Microsoft said Sunday it will cut the price of its best-selling Xbox 360 Pro with a 20GB hard drive to $299 from $349 while supplies last. In early August, it will introduce a new model with a 60GB hard drive for $349.

Bloomberg: The gap will close as studios negotiate online rights deals for old movies, Hastings said in May. The lure to studios is that they will capture nearly all of the money Netflix now spends on postage, about a third of its revenue, Hastings said. “If you were the studios, you would want this to happen,” said Hastings.