Microsoft announced at E3 today that along with a complete UI update coming to the Xbox 360, they will also be offering streaming movies via Netflix through the game console and Xbox Live. We had heard Netflix express interest in this partnership earlier this year and Microsoft says it will come to fruition in “late fall”. The new feature will require users to be subscribers to Netflix and manage their queue from their computer much like they do now, but will add the ability to stream and view the movies through the Xbox 360 game console. To make this even better, any Xbox Live Gold subscribers will get the service for no additional charge.

Basically this means that owners of an Xbox 360 are getting a brand new interface and all the features of a Roku box (Netflix set-top box retailing for $100) for no additional charges, aside the Live subscription fee that any true Xbox fan is paying anyway.

Not only is Microsoft moving in on the success of the PS3 and trying to make it more part of the living room entertainment center, but they also seem to be taking notes from the ever-so-popular Nintendo Wii and are adding “avatars” to the new Xbox 360 UI this fall. With the new 360 avatars users can make cartoon-ish representations of themselves and use them as a self-representation online for social interactions like sharing media or playing games.

Xbox.com