. . . Tuesday September 7, 2004

Tivo and Netflix: The New Peanut Butter Cup?

Not since you got your chocolate in my peanut-butter has there been such an exciting pop culture combo. Newsweek is reporting that Netflix and Tivo will form a partnership to enable you to download movies rented from Netflix into your TiVo box.

Suddenly there are now two Davids slingshotting the rocks. Unfortunately, there are about 10-15 Goliaths.

It could still be close. Netflix and TiVo are both companies with customers who love them in the sick, extreme, iPod way. They are both closely alligned. Mike Ramsay sits on the Netflix board and Reed Hastings has often commented that: “We named the company Netflix, we didn’t name it DVD by Mail.”

Part of me thinks this could be the little extra umph that both companies (especially TiVo) need to get over the hump and into the realm of Starbucksdom. But the downloading of movies revolution is still a long ways off for most people (think of your friends who use a vcr and drive to pick up rental movies) and the big players have plenty of time to deliver a soup to nuts (or soda to popcorn) offering under one brand that customers already subscribe to. Is this a partnership between two would-be titans or just the same kind of buzz that would have surrounded, say, a Kozmo-Webvan partnership in the late nineties?

Some may wonder why Netflix wouldn’t just acquire TiVo. Well, Netflix would never want to limit themselves to one device. Things could change for both companies if TiVo gets smart and gets out of the hardware business and focuses solely on selling the software and the service. In one sale, they could TiVo and Netflix enable a set-top box.

Concentration is important!