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TiVo, Netflix Digital Distribution Marriage Made In Heaven

Friday, 31 Oct 2008 | 10:38 AM ET

Thursday TiVo and Netflix announced a partnership that will make it even easier to give consumers the entertainment they want, on demand, from the comfort of their living room couch. I

If you've got a TiVo HD you'll have access TiVo will offer Netflix's "Watch Instantly" streaming movie service through TiVo's HD boxes, directly to your television set.

All TiVo subscribers should have access to the service by the end of the year, and there will be no extra charge for TiVo subscribers who have one of Netflix's unlimited subscription plans, that cost $8.99 and up. This means getting a movie from the internet, and watching it on your television, is going to become a viable alternative to driving to your Blockbuster or walking to a post office. (Who wanted to really watch a movie hunched over a laptop?)

For years people have been talking about a partnership between the two companies, both of whom have recently been making a spate of deals to offer their services through other technologies. TiVo allows its subscribers to use its set-top box to access Amazon.com's Unbox store, Walt Disney Studios and others, to rent or buy movies. It has a deal with Google's YouTube to access YouTube videos on your TV. TiVo even made a deal with RealNetworks' Rhapsody to give Tivo subscribers access to the Rhapsody music library through their television.

TiVo's CEO Tom Rogers said on CNBC in an exclusive interview that he thinks that this kind of service makes TiVo an even better value proposition during the economic downturn. He says consumers are thinking about going out less and spending more time at home, and watching movies through your TiVo box seems like a pretty good option.

Netflix has also been expanding its reach, partnering with a number of Blu-ray high-def disc players to stream Netflix videos direct to televisions. In the last year Netflix has rolled out deals to deliver thousands of videos to high def Samsung and LG Electronics Blu-ray players, and to Microsoft's Xbox Live game console. When Netflix launched it was competing with Blockbuster, and certainly provided a more convenient alternative. But when Blockbuster launched its online service Netflix realized it needed to become even more convenient, not even requiring that you walk to your mailbox.

Netflix has been hit by the economic downturn—sits stock has dropped nearly 40 percent in the past month—the company hurt by reports that it added fewer-than-expected new subscribers in its third quarter. This partnership should give consumers another reason to sign up for an unlimited subscription, and should help in that regard. Netflix keeps growing the catalog of movies available through streaming, just adding another 2,500 films through the Starz cable network.

On a personal note, I've spent several nights surfing around my TiVo, Amazon Unbox, and Apple TV, trying to find a movie to download or stream to my HD TV, so I can avoid getting in the car and driving to Blockbuster. The selection is always pretty disappointing and sure, maybe I should have planned ahead and ordered some movies through Netflix. But this solves all that. I think people, including myself, really want to live in an on-demand world, especially when it comes to home video. If you can find TV shows on Hulu to watch whenever you feel like it, why not get access to a library of DVDs without getting up from the couch.

What will this do to the media companies' home video revenues? It's still just starting off as a tiny little business. I think it would encourage me to pay more to get movies effectively on demand. But others might argue that it would discourage people from buying DVDs at a Best Buy. We'll see. I think any new revenue streams for the media giants should be evaluated seriously, and I think the movie studios will be careful not to offer their new releases too quickly.

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  • Working from Los Angeles, Boorstin is CNBC's media and entertainment reporter and editor of CNBC.com's Media Money section.