I wonder how much their existing partnership on the Xbox and Xbox Live played into this agreement?

This adoption will enable Netflix members to instantly watch thousands of TV episodes and movies over the Internet on a wide range of new devices such as Internet TVs, Blu-ray disc players, home theater systems, video game consoles and other devices from a broad variety of consumer electronics manufacturers.

Today’s agreement, which makes Microsoft PlayReady the primary content protection technology for Netflix partner devices and applications, underscores the benefits of PlayReady as a flexible, reliable and scalable content protection technology. Netflix already deploys PlayReady to enable all instant streaming scenarios on Windows-based PCs and Macs. The company expects the first Netflix ready devices beyond computers to incorporate Microsoft PlayReady as early as this summer. The Netflix ready device program, which launched in 2007, already has dozens of devices on the market that use Windows Media DRM.

You can read more about Microsoft’s PlayReady technology here –

Read the entire press release – Netflix Taps Microsoft PlayReady as Its Primary DRM Technology for Netflix Ready Devices and Applications