Netflix just announced that the company has selected Dolby Digital Plus for 5.1 channel surround sound to be delivered over its online streaming service, Watch Instantly. Starting on October 18, 2010, Sony's PlayStation 3 will be the first device to support 5.1 streaming audio from Netflix, with more devices to be added over time. This new update will also eliminate the PlayStation 3's need for a disc in streaming content from Netflix.

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Dolby Digital Plus supports up to 7.1 channels of surround sound from broadcasts, streaming media, downloaded media, and Blu-ray. This is not a new technology as many televisions, set-top boxes, Blu-ray players, AV receivers, and mobile phones have already shipped with Dolby Digital Plus.

Netflix has dominated the home rental market as well as streaming services. However, their high place in the streaming competition has had more to do with their installed customer base than the quality of the media. Netflix has been introducing more and more HD content but it maxes out at 720p and only has stereo sound. Not a big deal if you are watching on your laptop, but a bit upsetting if you are streaming to your home theater set up.

This new update is a big step for Netflix to take. Not only will there now be surround sound, but Netflix will also begin introducing full-on 1080p HD content. With Netflix continually expanding its content and improving its presentation, other companies stand less and less of a chance of ever hoping to catch up in this race.