It’s the best non-gaming news of E3: the long-reported rumors of a Microsoft/Netflix friendship are true. Starting this fall, after Microsoft updates Xbox Live, users will be be able to stream movies and television shows for free. Schweeeeet.

Well, almost schweet.

It’s not completely free. You have to be a Gold member of Xbox Live, which costs 50 bigs ones a year, and you have to be a Netflix member, of course – the lowest memberships cost $60 a year. And, although Netflix has just about any movie you could want in their library, only a fraction of them will be available through XBL.

I’m curious about two things:

1. Will Netflix limit the number of movies you can watch through XBL according to your membership level? Currently, there are no limits as to how many movies you can watch online, but as a Netflix user, I can confirm that there is a VERY limited number of titles available to watch online, so you’re still forced to use the mail service if you want decent titles, which limits how many movies you get every month, since it takes time to mail them back and forth.
2. Will Netflix begin offering XBox games via mail? Right now, Gamefly is the Netflix of video games, but with this new partnership, will Netflix give users access to games as well? If so, will they count as games as movies or will they set up new membership levels if you want to rent games as well?

Both Netflix and Microsoft are going to benefit from this partnership – Netflix users will be enticed to buy an Xbox 360 or pay for a Gold membership, while Xbox users will be tempted to try out Netflix. It’s a wonder that they didn’t team up sooner.

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