My 5 year old Sony TV can no longer support Netflix and can't be upgraded. External hardware is absolutely the way to go.
On the plus side you can benefit from your hardware with other viewing medium.
With a HDMI switch I can watch some Netflix either on my TV or my video projector this way - Not on a Pi though as Netflix uses proprietary encryption which is a pain to setup for it. But other things like a WDTV HD does the job fairly decently.