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When it launched last year, Roku was a compelling device because it was the first set-top box that streamed Netflix Watch Instantly movies to your television. Now, several other devices do that as well, including Blu-ray players, TiVo, the Xbox 360 gaming console and now LG televisions. Roku needed something else to help set it apart from the others — and today it got just that: Amazon Video on Demand.

Roku’s box will now have access to more than 40,000 titles that Amazon offers. Perhaps even more importantly though, it will give Roku owners access to newly released movies for the first time. Netflix Watch Instantly only offers catalog (older) films, but with Amazon, movies will be available the day they’re released on DVD.

I speculated back in July that winning such a deal could be a big win for Roku, and it is.

Of course, you’ll have to pay for these Amazon titles, and I assume that for the newest new releases you’ll still have to buy them rather than rent them. But the prices for Amazon’s service aren’t too bad. Also great is that anything you buy on the Roku box can be accessed on your PC or Mac as well. And just as with Netflix, streaming movies will scale in quality to your bandwidth, according to Gizmodo.

Back in September, Roku announced it was opening its box up to content providers — a smart move given its competition, and one that now will keep the $99 box alive for the foreseeable future. However, it’ll be interesting to see how quickly other competing boxes offer this Amazon functionality, because you know that’s coming.

It will also be interesting to see how Apple, which makes the rival Apple TV, will respond. Could Apple use tomorrow’s keynote address at the Macworld Expo to announce something new for the Apple TV, the blog Webomatica wonders?

Considering the device has neither Netflix support (unless you use the Boxee add-on) nor Amazon support (which it probably won’t be getting, since Amazon’s a direct competitor to iTunes), Apple TV looks weaker than the competition in many regards. Could we see an Apple TV/Netflix deal in 2009? Perhaps, but remember that Netflix chief executive Reed Hastings is on Apple rival Microsoft’s board of directors. Although that hasn’t stopped Netflix from rolling out on other boxes that compete with the Xbox 360’s Netflix streaming capabilities.

And one major question remains: Which will be the first set-top box with native Hulu support?

Roku raised an undisclosed but supposedly substantial third round of funding back in October from Menlo Ventures. This free Amazon update will come in “early 2009,” according to Roku’s site.

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