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.

This should make a lot of people happy. After a bit of a wait, I present the first Netflix set-top-box. Previously, Instant Viewing was available only to Windows PC users through the IE browser. But now, thanks to Roku, users can finally tap into at least a chunk of the Netflix library without having to wait for those damn discs in your mailbox for just $99.99.

The Netflix Player can even use a wireless signal to stream, but performance may differ here and there. It’s got HDMI, component, composite, Ethernet, S-Video and a Toslink optical audio jack as far as ports go. No HD support, but things look quite positive so far.

You can’t have a good format war without some fallout. With the fall of HD-DVD, the question has been raised regarding Netflix’s ability to sustain its subscribers and demands for the Blu-Ray Format. Netflix said today that its subscriber count will be 3% higher than forecast because of price increases from Blockbuster and cheaper online advertising rates. Of course, the raise in price led to a loss of thousands of subscribers for Blockbuster, many of them switching or even returning to Netflix.

Here’s another huge blow that the struggling HD-DVD format did not need. Netflix, the online and mail video rental giant will follow its rival Blockbuster’s footsteps and carry Blu-Ray exclusively. With endorsement to The future is Blu campaign, the company will now only buy Blu-Ray discs going forward and will phase out their stock of HD-DVD by the end of the year.

“We’re now at the point where the industry can pursue the migration to a single format, bring clarity to the consumer and accelerate the adoption of high-def.”, said a company spokesman. Netflix stated that they expect all studios to begin to publish movies on the Blu-ray format. With Netflix’s over seven million subscribers, I think it’s fair to say that this is a killing blow in the format war, whether the effects are immediate or forthcoming.