Multichannel News (via Apple Insider) is reporting that an industry source claims Netflix "Watch Instantly" is coming to the iPhone.

Netflix currently uses Microsoft's proprietary DRM, however, so unless they're planning on switching to something more iPhone friendly -- namely H.264 like YouTube did -- we're not quite sure how they'll manage it with anything approaching decent results.

That's if Apple even allows an iTunes competitor onto the iPhone (and before people howl "unfair!", it's not like you can load up PlayStation or Wii games on an Xbox 360 -- consoles control their media). And, of course, if AT&T allows streaming over 3G, which they wouldn't do for SlingPlayer Mobile...

(We'll also point out that Netflix is a US-only service, unlike iTunes which is available in many countries internationally).