Netflix & TiVo join forces

The Wall Street Journal just ran a story on the collaboration between Netflix and TiVo (http://online.wsj.com/article/SB122533284014583011.html).

This is a brillant play by both companies….

For Netflix:

  • Increased distribution to an avid fan base of TiVo users, who are by definition lead technology users (assuming they are not one in the same)
  • Providing a home entertainment device option for streaming content (Apple is looming with their Apple TV solution coupled with iTunes software)
  • Provides a proof point for the satellite and cable companies to deliver their content library

For TiVo:

  • Provides relevance again… the cable companies are really eating their lunch
  • Provides value by association (to something that is cool now) to an avid fan base
  • Differentiation in a commodity consumer electronic space

The bottom line: I think Netflix gets more out of this partnership strategically and could position them as a content supplier “middle man” between the movie studios and those companies that own the living room (e.g. Cable and satellite companies). If Netflix does not capitalize on this though, the TiVo outlet will probably not perform to the level that makes this a breakeven deal.