Our friends at Ubergizmo.com were right to cover the rumor back in February 2008. Movie rental service Netflix [NFLX] and Microsoft [MSFT] are joining forces for a movie-streaming partnership for Xbox 360. The software giant announced the deal at the E3 Media and Business Summit in Los Angeles. “The new Xbox experience represents the first time in history that a mass-market consumer electronics device has been re-invented through free software, giving people more fun and intuitive ways to interact, play, and enjoy entertainment content,” Microsoft said in a statement. The partnership gives Microsoft access to a slew of advantage to put to use on its gaming console. Not only does the company get the over 10,000 movie and television library Netflix owns, but it also gets access to its large customer


Netflix currently has over 8 million subscribers and a library of over 100,000 DVD and television titles, but only 10,000 of those are able to be watched instantly.

Only subscribers to both Xbox LIVE Gold and Netflix will have access to the service, but Microsoft hopes that the deal will bring in more customers to its premium online gaming console.

For about a year and a half Netflix has been offering streaming video on demand from its subscription service, which starts at $8.99 for the most inexpensive plan, but the service could only be watched on the computer.

The Xbox partnership marks the first time that Netflix titles will be able to be viewed on demand on a television.

It also puts Microsoft in a valuable position against rival Sony, as the Playstation family of gaming consoles has been offering movie and television capabilities for a long time. The newest version of the Playstation 3 is rumored to be even better, making the Xbox/Netflix partnership even more vital for Microsoft.