Netflix inches toward ubiquity

Netflix, the pioneering online movie-rental service, has inked a deal with TiVo to deliver its streaming content to its latest partner’s broadband-enabled set-top boxes.

The move continues Netflix’s (NASDAQ: NFLX) steady expansion of its Watch Instantly feature, bringing premium video content directly into users’ PCs.

For TiVo (NASDAQ: TIVO), the partnership extends its own broadband offerings, as the company made famous for allowing viewers to skip past commercials is beefing up its advertising and e-commerce platforms through partnerships with Amazon, Walt Disney, Comcast and others.

Netflix and TiVo are chasing the same dream that has captivated the imaginations of many folks in the Valley: the Internet-enabled living room. When you hear Steve Jobs talking about Apple TV as the company’s “hobby,” you get a sense of just how young this market is.

Still, Netflix took an important step in that direction by linking up with TiVo — it’s not live TV, but it’s a healthy body of premium content (more than 12,000 titles), commercial-free, streamed directly to your set.

Netflix streaming is currently compatible with Internet-enabled set-top boxes from Roku, LG, Samsung and, shortly, any Xbox 360.

Today’s news follows Netflix’s announcement Monday that it is testing an upgraded video player that, based on Microsoft’s Silverlight technology, will be compatible with Intel-based Macs. Netflix is putting the new version through its paces with a portion of new members, and plans a full rollout that will be compatible with all Macs by the end of the year.

Is it enough to keep Netflix sustainable? JP Morgan’s Barton Crockett has some doubts:

“We are concerned that Netflix subscriber growth may slow in [the first half of 2009], as it faces tough comparisons plus the headwind of a slumping economy. Longer term, we have questions about the size of the market opportunity, and Netflix’s ability over the very long term to generate profits in a world where online streaming displaces DVD usage.”

That may be, but as more media companies realize how important it is to make your content available on as many devices and platforms as possible, Netflix seems to be moving in the right direction.

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