Netflix, TiVo Partner To Beam Movies To TVs

SAN FRANCISCO — Home entertainment trendsetters Netflix Inc. and TiVo Inc. are finally joining forces to deliver more movies and old TV episodes to their mutual subscribers, consummating a relationship that was supposed to come together four years ago.

Under the partnership announced Thursday, the latest generation of TiVo's digital video recorders will be able to beam selections from 12,000 movies and TV shows offered through Netflix's streaming service, which must be piped over high-speed Internet connections. TiVo's DVRs will start catering to Netflix subscribers in early December.

The collaboration fulfills a promise made in 2004 when DVR pioneer TiVo and online DVD rental trailblazer Netflix set out to develop a system for delivering video directly over the Internet. But they got sidetracked after Netflix couldn't work out licensing deals with movie and TV studios.

By the time Netflix cleared the licensing hurdle and launched its Internet streaming service 21 months ago, the two companies had decided to pursue other partners.

But a reconciliation was inevitable, according to the leaders of Netflix and TiVo, whose Silicon Valley headquarters are about 18 miles apart.

"It's just a natural pairing and we are thrilled to finally be working with them," said Reed Hastings, Netflix's chief executive officer.

"I don't think there is any question we have gotten more frequently than, `What about TiVo and Netflix working together?'" said TiVo CEO Tom Rogers.

Coming off the first back-to-back quarterly profits in its 11-year history, TiVo is betting its ties to Netflix and other content providers like Amazon.com Inc. and Google Inc.'s YouTube will help distinguish its $299 DVRs from the generic recorders peddled by cable TV providers.

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Alviso-based TiVo ended July with 3.6 million subscribers and Los Gatos-based Netflix ended with 8.7 million subscribers. The streaming service is available at no extra charge to any Netflix subscriber paying at least $8.99 per month for DVD rentals _ a prerequisite that most customers meet.

TiVo will join other companies that sell devices that make it easier for Netflix's streaming service to be shown on a TV set instead of a computer.

Since Silicon Valley startup Roku Inc. introduced a $100 player tailored for Netflix's streaming service five months ago, Microsoft Corp. has agreed to tweak its video game console, the Xbox 360, so it can draw from Netflix's Internet library beginning next month. And both LG Electronics and Samsung Electronics are selling Blu-ray DVD players compatible with Netflix's streaming service.

Netflix eventually hopes to have its streaming service on dozens of devices, including TVs with built-in wireless connections to the Internet.

The growing selection of streaming devices could help boost Netflix's profits by causing subscribers to request fewer DVDs. Each DVD rental makes a round trip through the postal service that costs Netflix 84 cents, so fewer requests will lower expenses _ just as management is striving to save money to offset slowing revenue growth.

Netflix still has to pay movie and TV studios licensing fees for the streaming rights, but that doesn't cost as much as mailing DVDs, said Wedbush Morgan Securities analyst Michael Pachter.

"Netflix has really stumbled upon something that's pretty clever," Pachter said. "It's kind of a win for everyone because the customer gets the instant gratification of watching a movie over the Internet, studios get more licensing fees and Netflix saves money."

Comments

[Josephus]

The elephant in the room on this is that it requires broadband internet service, which the majority of U.S. citizens/consumers still don't have.

Fact is, the U.S. is a third world country when it comes to high speed broadband. Until the nation gets off of the "privatization" bandwagon and begins to do as other gov's have done elsewhere this service will only be available for a relative few. We need another "Rural Electrification Act" to provide broadband for all citizens rather than to just the consumers who provide quick, easy profits for the corporations that have a strangle hold on broadband service.

More than any other measure at present, providing high speed broadband for all citizens would go very far in opening up our economy to entrepreneurship as is happening in those nations that have done so already.

[43P04T34]

OK, if they can stream a movie to your TV over the Internet why can't they stream software to your TV over the Internet.

Huh?

Answer me that.

[nellie]

I wish Netflix would spend a little money to beam movies to mac computers.

[jmpurser]

I've heard this same duo had that planned.

[MikeF74]

Enough with the standard definition services Tivo!!! Bring on the HD!

[hoos30]

clsmithj: The Roku device already has the Netflix service; Xbox 360 will be the second.

I'm sure there will be many more to come. At any rate, this is good news...now Netflix can bump up it's movie selection. Right now it's just "fair".

[kissnahug]

Just buy a S video cable and the wire for the sound and connect the computer to the tv. Works like a charm for me and saved me a couple hundred bucks. Plus, there movie selection is not all that great yet.

[sthrnby]

I have one of the Roku Netflix players and it works pretty good. It is nice to be talking to someone, mention a older movie, then be able to play it instantly. Partnering with TiVO is awesome!

[clsmithj]

Xbox 360 will be the first device that gets the Netflix service this November when Microsoft rolls out the new Live Experience update to Xbox Live users.