Virgin Media to Test TiVo/Netflix Combo

U.K. cable operator Virgin Media is about to become the first pay –TV operator to offer the Netflix video streaming service on  leased set-top boxes -- in this instance, on devices that run TiVo’s software and user interface.

According to a release issued on Monday, the U.K.’s largest MSO will begin to test the TiVo/Netflix combo with 40,000 TiVo subs this week ahead of an anticipated full commercial launch later this year. Virgin Media currently has more than 1.7 million customers taking the TiVo option, which is offered on gateways made by Samsung  and Cisco Systems. Virgin Media will deliver Netflix streams to subscribers via dedicated, managed broadband connections that grace the MSO’s TiVo-powered boxes. Virgin Media delivers its regular high-speed Internet service using separately-provisioned bandwidth. 

It was not immediately known if the integration of Netflix on Virgin Media’s video platform has resulted in a direct financial relationship between the two companies or if the tie-in is the result of a carriage deal that's in any way akin to the type of deals that the MSO has with more traditional premium programmers, such as HBO.

A Netflix spokesman said no additional details on the business aspects of the arrangment are being released during the initial pilot phase.

A Virgin Media spokesman on Tuesday also said the companies were not sharing commercial terms, but likewise suggested that adding the Netflix app onto the MSO's platform "is not an obvious fit for a traditional carriage model."

Virgin Media, which is now part of Liberty Global, said the app will allow it to expand on its own VOD service, which offers about 6,000 hours of content. The integration will give Virgin Media TiVo subs access to Netflix fare on the set-top, including Netflix originals such as House of Cards, Hemlock Grove, Arrested Development, and Orange is the New Black. The U.K. version of Netflix also gets access to episodes from the final season of AMC hit Breaking Bad soon after they debut in the U.S.

The integration is significant in that TiVo has regularly offered Netflix on DVRs sold at retail but not on boxes leased by cable operators and other pay TV operators. In the U.S., conditions built into some of the contracts Netflix has with programmers have prevented Netflix from  being offered on MSO-leased TiVo HD-DVRs. Virgin Media’s arrangement with Netflix in the U.K. seemingly is not hindered by those contract issues in the U.K.

In an email exchange, TiVo spokesman Steve Wymer acknowledged  that U.S. operators face a different content and rights environment, but if Virgin Media and TiVo “can lead the way in the UK, we’re hopeful that the landscape evolves to integrate this desirable experience to the living room in the U.S. ... Clearly there is demand for this experience and this is a very fine example of a well-executed integration that is materially driving business for our partner in the UK and showcasing TiVo’s innovation.”

The trial and coming launch with Virgin Media will also be a boon for Netflix, which competes in the market against Amazon-owned LoveFilm.

"We're delighted to be bringing yet another groundbreaking service onto TV screens in millions of Virgin Media homes. Netflix is a fabulous addition to Virgin Media TiVo, enabling our customers to enjoy even more of their favourite shows and movies simply and easily - all through their TV set-top box and at outstanding value,” said Virgin Media COO Dana Strong, in a statement. "Virgin Media TiVo offers different ways to watch, either subscription or pay per view, all seamlessly integrated for simple, intuitive viewing so there's a world of great entertainment at your fingertips and everyone can be sure of the perfect TV moment."

"The UK has given Netflix a fantastic welcome and we're excited to be partnering with Virgin Media to bring an amazing Netflix experience to Virgin Media customers,” added Bill Holmes, Netflix’s global head of business development.