TiVo Double Crosses Netflix – Opts to Sell Blockbuster Online With TiVo Service

By Davis Freeberg

Editor’s Note Davis Freeberg is a shareholder of both Netflix and TiVo

I’ve got to admit that when I first woke up this morning I was a little shocked to see Dave Zatz report that you can find Blockbuster Online subscriptions through the TiVo website. TiVo has had a vaporware partnership with Netflix for sometime and while I didn’t expect that we would see TiVo would start showing downloadable Netflix movies anytime soon, I had always held out hope that we might see Netflix start bundling TiVo with their online service. The two services are a perfect marriage for each other, but it looks like TiVo has opted to go with Blockbuster Online instead.

I’ve got to assume that Dave Zatz’s screenshot was accidentally published by TiVo early because TiVo seems to have three different prices for the online service. All three packages include an 80 hour TiVo box for one year, but have price points of $29.99, $32.99 & 35.99. It could be that TiVo is still experimenting with the pricing on this or it might be that these three plans represent the one, two and three DVD at a time programs.

I know that in the past Blockbuster has sold TiVos at their retail stores, but it’s been a few years since I’ve seen Blockbuster carry TiVo. If TiVo is in fact turning their back on Netflix and going with Blockbuster Online then this represents a big coup for Blockbuster. The more DVDs that customers rent each month adds to the cost of maintaining an online program and if Blockbuster can give you 80 hours of customizable television, then it will inevitably reduce the number of DVDs that customers will rent each month.

I think that this arrangement makes natural sense for TiVo, but I’m pretty disappointed that TiVo didn’t make better use of their vaporware partnership with Netflix and sell their service instead. When their partnership with Netflix was announced there was a lot of hoopla from the stock market over it, but it appears that the only good thing that has come out of it was Michael Ramsey leaving the board of Netflix. Netflix offers a better online experience and their interests seem better aligned with TiVo’s, yet TiVo has still choosen to endorse a dying company with terrible customer service over a Silicon Valley start up that has changed the rental industry forever.

Given the amount of hype that we’ve seen for the Netflix player, it’s bitterly disappointing to see TiVo not make at least some use of their agreement and it makes me wonder if the Netflix player may also be at risk. I’ve always understood why Netflix would want to sell VOD over TiVo’s platform, but I’ve never understood the benefit to TiVo for doing this. Couldn’t TiVo license the content themselves and cut out Netflix as a middleman or is their relationship with Hollywood so bad that they knew that they had to use a Netflix or Blockbuster to get access to VOD content? Either way, this new partnership casts further doubt about the future of the Netflix player.

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2 Comments

  1. Bryan Socha says:

    How are they doublecrossing? netflix said a couple months ago online wasn’t feasible. I thought they pulled out.

  2. Netflix never said it wasn’t feasible, in fact they went as far as to say that they were planning on leading the download market, but that it was a matter of time for studios to get comfortable.

    When TiVo and Netflix first announced their “partnership” on VOD it generated a lot of excitment for investors by the new revenues this could bring in. Unfortunately, Netflix couldn’t get the studios to play ball and it turned into vaporware. It doesn’t bother me that the partnership didn’t yield anything due to outside forces, but as a shareholder, I think that the very least that both companies could do would be to try and monetize the relationship before VOD emerges.

    When TiVo starts supporting Netflix’s competitor instead of promoting their partnership, I have to question whether there was ever any substance to the TiVo Netflix “partnership” to begin with.

    All along I have argued that TiVo and Netflix compliment each other well. Ultimately, it’s in Netflix best interests to distribute as many TiVo boxes as possible, if they really plan on using TiVo for VOD in the long run.

    Netflix could rent TiVo boxes which would reduce shiping costs for them and TiVo could sell subscriptions for Netflix as repayment. Having Netflix rent the boxes would also give consumers an opportunity to try the box without having to commit to a one year obligation.

    By partnering with Blockbuster, TiVo is signaling to investors that the Netflix partnership was nothing more then gossip and that they aren’t serious about utilizing their relationship with them. I know that Netflix and TiVo never agreed to promote their current services, but as a shareholder in both companies, I can’t help but feel a little deceived when I see TiVo sneaking around behind Netflix’s back.