Newsweek: Netflix and TiVo to announce partnership, offer downloadable movies

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Newsweek: Netflix and TiVo to announce partnership, offer downloadable movies

040903_netflix_vl.vmedium Tomorrow's Newsweek carries a story about a new Netflix/TiVo partnership that sounds perfect for anyone that has a subscription to both TiVo and Netflix.

Subscribers who belong to both services will be able to download their Netflix DVDs over the Internet directly into the TiVo boxes in their homes, instead of receiving them in the mail.

There aren't many details, but the article makes it sound like the downloading and viewing will be instant when even on a good fast cable modem, it's likely a ~700Mb DivX encoded movie would take around an hour to download for viewing. Still, it beats having to wait several days for discs in the mail and having to return anything.

I'm curious how TiVo will be able to do this, given that it's likely to cut into movie studio profits from the sale of DVDs to home customers and video stores. Will Netflix be required to only allow x number of copies of a film downloaded, where x equals the physical DVDs they have purchased? Will they only let you have another movie when you delete the film off your TiVo?

And I hate to be an asshole that goes around saying "I told you so!" but I did float this idea two and a half years ago. I really wish my DirecTiVo could do this, because this feature alone would turn me back into a Netflix customer. It definitely sounds like a win-win for both companies, especially since just about everyone I know that has a TiVo also has a subscription to Netflix.

by Matt Haughey September 5, 2004 in News

Comments

You won't have HDTV quality downloads with this deal though. It's just not there yet. I'd rather get the DVD's with the full 8.5 GB of compressed bytes instead.

Posted by: jeff refernet at Sep 5, 2004 11:42:37 PM

Matt, you're not the only one who floated this idea. :-)

Back in 2001, when the Series2 was first announced with USB and networking, I mentioned this concept in a few posts. Then TiVo talked about it way back then - remember they originally said the S2 was going to have games from JellyVision, A/V content from Real, and movies from Radiance. Then the market changed and those deals seem to have dried up. This one sounds a lot more real - since they have already proven the transfer system in home, and probably outside of the home in testing, since they have FCC approval for that.

I don't the the studios care about the number of DVDs sold - just money. As long as Netflix pays some kind of royalties/license, I don't think the studios will care. I'm sure it is all protected with TiVo Guard.

The article does say: "(The downloads will likely take several hours.)"

I doubt we were the only people to put 2 and 2 together. :-) Great minds, etc. ;-)

Jeff - the article doesn't say what the video quality is. But they could just be ripping the MPEG2 right off the DVD. Most commercial DVDs have bitrates comparable to high quality TiVo bitrates (5.8Mbps for Best on a standard TiVo), and less than the birates for the DVD-RW TiVos (9.5Mbps at Best, an average 5.3Mbps for High). DVDs are better for a given bitrate because they use multi-pass encoding and DVD production experts who hand tweak the encoding settings for the specific video.

The real issue would be the downloading time involved. Still, I have a 1.5Mbps download on my DSL, and a lot of people have faster connections to that on cable modems, etc. That's enough to grab the average movie overnight, beats the mail and nothing to worry about mailing back.

Posted by: MegaZone at Sep 6, 2004 12:42:47 AM

Ergh! After all the angsting about getting a new Tivo (the GF has the old one at the moment) in light of all the digital cable standards, I decided to not invest in any more analog television equipment and my next video equipment purchases would be digital bits that supported things like HDTV and CableCard. Tivo and Netflix - two of my favorite services - are trying really hard to make me go back on that promise to myself. Must resist urge to go buy new Tivo...

;-)

In all seriousness, though, I do like the bind that this deal would place cable companies in. Either spend the money to copy the service and provide a library comparable with Netflix, or watch people adopt Tivo's and Netflix. I also liked the bits how the cable company would grudgingly probably allow this on their networks, so that subscribers don't migrate to DSL. It's nice to see Tivo fighting back.

(Of course, all of this assumes that the Tivo board adopts the proposal. If anyone from Tivo is reading this, you're morons if you refuse.)

Posted by: Chris Karr at Sep 6, 2004 8:07:53 AM

One final thought... Given the recent rush to place every old television show on DVD, ad Netflix's stocking of the said shows (I'm a DS9 addict at the moment.), I think that a Tivo + Netflix combination has the potential to serve as an alternative video service to the cable companies. It seems that the main thing lost are new shows and live content - as companies put more shows on DVD, the content gaps are filled in.

Given that this could be a completely on-demand and advertising-free service, I imagine that I'm not alone in thinking that this could be the almost perfect replacement to cable. I'd miss things like "The Daily Show" every night and some would probably miss sports, but taking the plunge would be worth it (and worth sending more money to Netflix and Tivo) in my case.

Thoughts?

Posted by: Chris Karr at Sep 6, 2004 8:15:59 AM

Doesnt anyone care that most TiVo's dont support widescreen-compatible outputs or digital audio output?

I have one that does (its a Pioneer with a built-in DVD burner), but most do not, so I can almost guarantee that these are not DVD quality, but simply on-demand TiVo movies.

As a result I dont think they will be distributing actual DVD but instead 3:2 TiVo-quality stereo copies (blecch!). In which case, its not much more interesting than cable's on-demand video services, except you have to wait forever for the download and have a larger selection of movies.

Seriously, why watch a stretched-out 3:2 stereo movie on your 42" HD plasma widescreen with Dobly Digital surround sound?

Posted by: Seth Brundle at Sep 6, 2004 9:22:08 AM

The next step will be a deal (for distribution) with the Telcos (eg: Verizon) that are rolling out fiber directly into the home (FTTP). Speeds range from 5 mbits to 30 mbits with the ability to scale to > 100 mbits. A service offering of TiVo + Netflix + XM Satellite (all with single box access) is vastly superior to Cable DVR / VOD / Premium Music Channels. If the Telcos can fill in the gaps for broadcast / cable TV, the Cable (eg: Time Warner) solution starts to have some serious deficiencies.
Industry pundits continue to doubt the consumer case for FTTP - but a TiVo + Netflix partnership certainly provides the killer application to generate the bandwidth demand.

Posted by: Jonathan at Sep 6, 2004 11:27:00 AM

The whole point of the Internet is that service providers like TiVo/Netflix don't have to make deals with ISPs; packets are packets.

It will be interesting to see what this partnership does to Akimbo; they could be doomed before they get off the ground.

Posted by: Wes Felter at Sep 6, 2004 12:00:51 PM

Check out number 9 for TiVo in my article written back on August 9th.

http://thomashawk.com/2004/08/top-10-things-that-microsoft-and-tivo.html

Posted by: Thomas Hawk at Sep 6, 2004 1:21:24 PM

DirecTV is beta testing Starz on Demand right now for those who have DirecTivo. It's pretty cool. Before the movies come out on Starz they are downloaded to your Tivo and you can watch them whenever. Best of all, their Widescreen. It's not as cool as the Netflix/Tivo offer though, but it's a start. I really want netflix to win against Blockbuster and *shudder* Wal-Mart.

Jas

Posted by: jason at Sep 6, 2004 2:04:05 PM

But will this generate revenue for Tivo and Netflix? I'm not sure. Would buy a Tivo to have this functionality, and pay an extra $300 a year in Netflix subscription fees for it? Also, I wonder who the tech backbone behind this is, because I don't think these two companies, which are both on a downward spiral, can do it on their own. If Microsoft and Apple allowed expiring movie downloads through their music stores and plugged it into their media centers, wouldn't that be cheaper and easier?

Posted by: David Jacobs at Sep 6, 2004 2:09:39 PM

Considering DTV hasn't yet allowed the Home Media Option on their TiVo combo boxes, I doubt they'll allow this either. Anything that distracts their customers from watching DTV content and buying PPV must be frowned upon by management... which is a real shame. In the meantime I have hacked OS 4 and HMO onto my DTiVo and really enjoying it. 'Tis a shame it's not officially sanctioned by DTV, since the Series 2 hardware can obviously handle it, and DTV customers are missing out on a great feature set from TiVo.

I think this NetFlix partnership can be great, and I hope it works well.

Now, how does DirecTV's "Starz on Demand" get it's content? Does it record the movies at night secretly and hide them on the HD? Because AFAIK the networking on these boxes isn't enabled in the stock configuration.

The ironic thing is, once I set up TiVo to cache a bunch of movies off HBO, Sundance, IFC, TCM and others, I no longer had the time nor interest for a NetFlix subscription. I've always got 15-20 requested movies waiting for me. Technology like this might make me change my mind though.

Posted by: Josh at Sep 6, 2004 6:55:11 PM

AMAZING idea! I hate to say it, but I would pay more for my Netflix subscription, which I already have, and definitely purchase a TiVO; which I've been considering purchasing, but haven't yet. This, of course, is dependent on the number of titles offered through Netflix.

I can easily imagine watching all of HBO's Band of Brothers or Season 4 of The Sopranos, each disc consequently, every night for a week instead of waiting up to a month or more for all the individual discs to arrive by mail. I'm in for sure.

Posted by: Eric Rolph at Sep 6, 2004 8:59:07 PM

As a DirecTivo customer, this means very little (and if Tivo doesn't get more stand alone subs, it means little to them too). In fact, realizing just how much current media bill comes to every month, I just canceled my Netflix sub. I've got so much content waiting to be watched on Tivo already-who has the time? Sure, I want to see the higher quality of a DVD (which this download service won't provide) but I'm already paying for HBO and Showtime, so most new releases will eventually make their way to me anyway.

Posted by: Bruce at Sep 7, 2004 7:41:56 AM

The article states that this is likely a Divx download. I seriously doubt that as it would require software decoding of a Divx file and the TiVo does not have a fast enough CPU to do that. The file would have to be in MPEG-2 format as are all files stored on the TiVo and that means larger files - about 2.2GB/hour if the file is encoded at 5 Mbps. So assuming you could get download speeds of 1Mbps it would take 5 hours to download 1 hour of video, not unreasonable but not very fast either. This would allow you to download 1 movie per day which is about as much as most people can watch.

Posted by: Wayne at Sep 7, 2004 12:43:54 PM

This technology and service is already being offered and will be available in January 2005-see www.davenw.com

Posted by: BUSH at Sep 8, 2004 11:35:04 AM

BTW, your preview comments template isn't working properly. It lost my Name & email addr. and is still showing the URL field.

Herb Greenberg just wrote a column entitled " Why a Netflix-TiVo deal is irrelevant" (http://cbs.marketwatch.com/news/story.asp?guid=%7B40B3B63B-C005-49F6-ACD2-ED274A9FD8D5%7D&siteid=mktw&dist=nbc). Here's the relevant part:

Noodling Netflix: In the hoopla over a possible linkup between Netflix and TiVo, something appears to have been lost on investors: Even if the two strike some kind of deal allowing Netflix (NFLX: news, chart, profile) subscribers to access movies by downloading them onto a TiVo for a monthly subscription price or on a pay-per-view basis, it's unlikely the library of titles will be anywhere near the 25,000 Netflix now claims -- at least not any time soon. Ditto Netflix's plans to offer download services, which the company has suggested will happen next year.

Blame that on a complex web of film rights and so-called use windows granted by movie studios, which are different for "hard goods," such as retail or DVD-by-mail, and "electronic," which can include the Internet or TV. "The big ah-ha for a lot of companies is that the availability [of] these movies is gone because of the rights that have already been sold," says Bob Greene, senior vice president of advance services for the StarzEncore Group.

Starz, for example, already has long-term exclusive rights for electronic delivery of film libraries from Disney, Sony's Revolution and for half the first-run library of Universal, as well as electronic distribution rights to movies from a handful of independent studios. HBO and Showtime have equally exclusive electronic deals with other studios.

In many cases, Greene says, these rights stretch to 2010. That means any company offering online movie downloading, via pay per view or subscription, will be operating from a remarkably limited library of movies that are either old or -- as is the case for first-run pay per view -- available for a limited time.

Case in point: Downloading pioneer MovieLink's library numbers slightly less than 900 movies -- all of them pay per view. Rival CinemaNow has a few more, with a choice of pay per view or subscription. But its subscription access, at $9.95 a month or $49.95 per year, is limited to 614 movies; throw in adults-only fare and the number of titles rises to 709 for $29.95 per month or $99.95 per year. (First-run movies are available for an extra pay-per-view charge.)

StarzEncore is wading into the subscription downloading waters though a partnership with RealNetworks (RNWK: news, chart, profile) known as Starz Ticket. It offers 150 titles for a monthly price of $12.95, with a twist: Since it's pulling from its own library, on which it has Internet rights, its subscribers can get first-run movies without paying extra.

Posted by: TraderMike.net at Sep 10, 2004 5:30:09 AM

Well, I did mention in this original post that I was skeptical of Hollywood allowing them to do this.

But didn't Netflix talk about having the rights to stream movies in the Wired article from a couple years ago, and they hinted at their online plans to deliver films:

http://www.wired.com/wired/archive/10.12/netflix_pr.html

Posted by: Matt Haughey at Sep 10, 2004 8:36:34 AM

Actually, it's mentioned in last summer's Wired Top 40:

http://www.wired.com/wired/archive/11.07/40main_pr.html

Posted by: Matt Haughey at Sep 10, 2004 8:38:29 AM

Ok guys...somebody help me out here. I currently have digital cable and a Netflix subscription. I had been planning on switching to Directv with TiVo for a couple reasons: 1)to save money over cable and still get a lot of features and 2)it seems to be the only TiVo that can record two shows at the same time. I HAD been going nuts after hearing about the Netflix/TiVo deal, but after reading that DirecTiVo is pretty much getting screwed here, I'm back to square one. Any suggestions? Stick with cable...downgrade to basic cable and get TiVo...still go with Satellite...I'm lost.

Posted by: Jason at Feb 8, 2005 8:31:08 AM

I agree with you on the main issue of the topic. I remember, long time ago, Jack London said something like "Everything positive has a negative side; everything negative has a positive side." I also find it interesting to see different points of views and learn useful things in the discussion.

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Newsweek: Netflix and TiVo to announce partnership, offer downloadable movies

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