News

Netflix Gets TiVo'd

10/31/2008 8:00 PM Eastern

Teaming up for their biggest end-run yet around cable TV, TiVo and Netflix announced a pact under which customers with Internet-connected DVRs can access Netflix's library of more than 12,000 titles.

The two companies said they initiated a test of the new capability last week to several thousand U.S. households and expect it to be broadly available in early December.

The combination creates “the ultimate video-on-demand service,” TiVo CEO Tom Rogers said in announcing the deal. He added that it “solidifies TiVo's leading position as the one-box solution for aggregating, searching and delivering the best content available anywhere right to the TV.”

The partnership at this point appears to be aimed at fueling buzz for Netflix's Internet-streaming service and TiVo's broadband play, which are still in the early stages.

Of the 3.6 million TiVo subscribers as of the end of July, only about 800,000 have connected their DVRs to a broadband pipe and only about two-thirds of those regularly use the broadband features. Netflix has about 8.7 million subscribers. The companies didn't say how many customers have both services.

Forrester Research principal analyst James McQuivey said the joint service won't drive new customers TiVo's way. For existing TiVo subscribers, he said, “this is a nice bone to toss them in difficult economic times: more free content to justify the continued spend.”

It's more significant for Netflix, whose “ultimate plan is to be an ingredient in people's lives, not a DVD-by-mail service, and this is one more step in that direction,” McQuivey said.

Netflix's “Watch Instantly” Internet-streaming service is included as part of its monthly subscription plans. The company has recently increased the selection available through distribution deals with Starz Entertainment — which will provide 2,500 titles, as well as a live feed of the Starz TV channel — Disney-ABC Television Group for Disney Channel content, CBS and others.

Netflix is embedding its Internet-streaming service in a host of consumer electronics. The company has deals to enable Internet streaming in the Blu-ray Disc players from Samsung Electronics and LG Electronics, as well as Microsoft's Xbox 360 videogame console and Roku's $99 set-top.

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