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Netflix already has some direct streaming available online, this simply removes the need for a computer in the equation and will do well with people that don't have a computer already hooked up to their tv. Again, I'm not part of that demographic.
I wonder if they'll really have the bandwidth to pump this stuff out. My friend uses the online streaming the offer and performance is far from steller, albeit somewhat adequate overall.
An interesting aspect of this streaming video service is the Netflix Media Center extender mentioned in a link on the engadget article. This could remove the need for Xbox360 (and media center computer users) to purchase the box altogether. Bad news for Roku, but good news for Netflix if a country full of xbox users suddenly want easily streamed full length movies for a low monthly price.
I'm almost tempted to think that piracy is still easy enough to contend with this, but streaming video is such a swift delivery method and perfect in a society that craves instant gratification. If Netflix finds a way to get Youtube and maybe some internet radio on this set top box but doesn't fall into the trap of trying to make a "TV Computer," this streaming content delivery service thing could really catch on.