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Netflix Gets Hamstrung on Leased TiVos

Jeff Baumgartner
LR Cable News Analysis
Jeff Baumgartner

Netflix Inc. (Nasdaq: NFLX) confirmed Thursday that some of its deals with studios and other content providers prevent it from offering its streaming video service on TiVo Inc. (Nasdaq: TIVO) DVRs distributed by Suddenlink Communications and other types of MVPDs (multichannel video programming distributors).

"Only those TiVo units sold in the retail channel are licensed to offer the instant streaming functionality from Netflix," Netflix spokesman Steve Swasey said via email. "Further, TiVo does not have the rights to offer Netflix on the boxes provided to Suddenlink because our agreements with numerous content providers don't extend to devices distributed via MVPDs."

Netflix has yet to say if it intends to build in such allowances as it signs new deals or tweaks its licenses, but the admission jibes with Suddenlink's statement that it could not offer Netflix streaming on specially outfitted TiVo Premiere DVRs that it is starting to offer in two Texas markets. Those boxes, however, do integrate access to the MSO's own video-on-demand (VoD) platform and provide access to a sizable amount of over-the-top content from YouTube Inc. and other sources. (See Suddenlink Blames Netflix Contracts and TiVo Makes its Suddenlink Debut.)

Suddenlink says it's open to offering Netflix streaming when and if Netflix's contracts would allow it.

But the limitations in those contracts likewise prevent TiVo from offering Netflix streaming on any of its DVRs leased by US MSOs. Swasey confirmed that the same would be true for Evolution Digital LLC, which is offering a TiVo box option to Tier 2 and Tier 3 MSOs. This would also presumably apply to RCN Corp. and any other MVPD that ends up leasing broadband-fueled TiVo boxes. (See Evolution Launches TiVo MSO Portal, RCN to Expand TiVo 'Premiere' Rollout, and TiVo Covers Its Cable Bases .)

Interestingly, TiVo boxes integrated with Cox Communications Inc. 's VoD platform will have no such barriers. That deal, announced in August, calls for Cox's home-grown VoD service to be integrated with TiVo boxes sold at retail, so it follows that all the OTT options offered via TiVo, including Netflix and Amazon.com Inc. (Nasdaq: AMZN), should be cleared for takeoff when Cox starts to promote the service in some major markets starting next year. (See Cox, TiVo Strike a DVR Deal.)

— Jeff Baumgartner, Site Editor, Light Reading Cable

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Jeff Baumgartner
Jeff Baumgartner,
User Rank: Light Beer
12/5/2012 | 4:15:46 PM
re: Netflix Gets Hamstrung on Leased TiVos

Brent Smith, president of Evolution, also confirmed that MSOs that lease  TiVos to subs are restricted from gaining access to Netflix on those devices. And that extends to all of Evolution's resellers. "It is an unfortunate circumstance, but is out of the control of both TiVo and Evolution," Smith wrote to us in response to questions.

Unless Netflix can revise its deals to reverse all that, this is too bad for Evolution's customers, which tend to be of the tier 2/3 variety.  Many ops in that cateogry offer Docsis modem services but haven't deployed (or can't afford to deploy) cable  VoD, and I'm guessing that many of them were hoping they could use Netflix streaming to help bridge that gap.  On the plus side, there may be other options among TiVo's content partners that can help out (ie. Amazon or Blockbuster).



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