Netflix, TiVo team up to deliver films on demand via Internet

NEW YORK -- One of the longest-awaited partnerships in home video finally appears to be ready as Netflix NFLX and TiVo TIVO Thursday unveil a plan to offer customers films on demand via the Internet.

By early December, following a technology test, Netflix will stream any of 12,000 movies and TV shows to its subscribers who also subscribe to TiVo — and have a Series 3 or high-definition DVR connected to broadband.

"In terms of two long-standing brands coming together, this has great significance," says TiVo CEO Tom Rogers.

They planned a similar service in 2004; Mike Ramsay, then TiVo's CEO, resigned from the Netflix board to avoid a conflict of interests. But studios refused to license films, fearing that it would hurt DVD sales.

Since then, "We have a great head of steam on those content rights, and we're trying to get our streaming software in every Internet box," says Netflix CEO Reed Hastings.

His company has separate deals to transmit films to equipment made by LG, Samsung, Roku and Microsoft's X-Box.

The service has few recent hits: Studios offer films for streaming after they've run on premium channels including HBO and Showtime, although Netflix has a deal to offer some films licensed to Starz.

Netflix's titles available on the Web include No Country For Old Men, Ratatouille, Casablanca, 2001: A Space Odyssey, Hannah Montana and CSI.

The deal "makes TiVo a more attractive Christmas gift, but it is what it is," says Larry Gerbrandt, principal of Media Valuation Partners, a consulting firm.

The agreement helps TiVo's effort to position itself as a multifaceted entertainment service, in contrast to the less expensive cable and satellite provided DVRs.

Meanwhile, Netflix wants Internet delivery to compete with cable and satellite VOD services.

Executives wouldn't say how many customers now could watch Netflix videos on TiVo. The DVR pioneer has 3.6 million subscriptions; Netflix has 8.7 million.

Subscribers to the two services who have the right equipment will use their computers to tell Netflix what video they want the company to transmit. Picture quality will be similar to a DVD.

"We only have a little bit of content for high-definition streaming," Hastings says. "And not that many people have enough bandwidth, 8 to 10 megabits-per-second connections, to do this."