TiVo and Netflix confirmed Sept. 30 that they will develop technologies for the digital delivery of movies for viewing on television sets and will jointly work on securing content deals with studios.

(The Hollywood Reporter) -- TiVo and Netflix confirmed Sept. 30 that they will develop technologies for the digital delivery of movies for viewing on television sets and will jointly work on securing content deals with studios.

The movies-on-demand initiative has no name or price yet -- executives won't even say whether it will operate via a subscription model or à la carte service -- though it will be available next year.

In a pre-emptive move to squelch concerns of conflicts of interest, TiVo CEO Mike Ramsay has resigned from the Netflix board of directors, a position he has held for several years. In fact, Netflix CEO Reed Hastings said, it was the resignation that prompted the firms to announce their partnership several months before a product will be ready.

"If we don't put it in context, people might come to the wrong conclusion," Hastings said.

Hastings said the companies had discussed a partnership for three years, but began a joint-development project a year ago.

TiVo and Netflix intend to pursue content licenses for the next nine months, Hastings reported.

"For Netflix, it's not a bad deal because they won't have to spend a lot of money," said Dennis McAlpine, managing director of McAlpine Associates, which rates Netflix shares a "buy."

Hastings said Netflix has increased its spending on research and development every year since spending just $1 million in 1999. The company spent about $30 million this year.

He predicted only modest success with next year's earliest version of the TiVo-Netflix product. "No new technology is ready to be mainstreamed right away," Hastings said, predicting that DVDs will still dominate the marketplace five years from now.

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