Another day, another head-turning example of how the boundaries between traditional and over-the-top (OTT) online video distribution are blurring. This morning Cox Communications, the 3rd-largest U.S. cable operator, is announcing that it will integrate its entire VOD library into TiVo's Premiere multi-purpose box, the first time a major cable operator has done so with a retail-only product. Cox will promote and offer free installation for Premiere which, when coupled with a CableCARD, will support Premiere as a full set-top box solution in its markets (Premiere boxes cost $300 or $500). The deal is a significant win for TiVo, which has continued to rollout clever products, but has been challenged to go beyond its traditional retail proposition.
As important, TiVo will continue to make available all of its integrated online video offerings (e.g. Netflix, Amazon, YouTube, Break, Howcast, CNET, etc.), which means that Cox is enabling online video options to be exposed and promoted side-by-side with its own video offerings. As Jeff Klugman, TiVo's SVP/GM of Products and Revenue explained to me yesterday, TiVo's search function would allow, for example, a user searching for "30 Rock" to see results including Cox VOD listings for the current season and upcoming on-air episodes blended with prior seasons available from Netflix, Amazon or Blockbuster.
Cox's move breaks new ground among major cable operators, which have resisted mixing their walled-garden video with Internet-based sources. For instance, I'm a Comcast digital video subscriber and have had TiVo-branded DVR service included in my digital set-top box for a while now, but all of the online sources TiVo enables on its retail boxes have been disabled since day 1. That has forced me to find add-on solutions (in my case with Roku) that enable Netflix Watch Instantly viewing on my TV. Clearly, the all-in-one Cox/TiVo solution is a superior, more elegant approach.
While Jeff didn't want to speak for Cox's motivations, he did say that Cox recognizes that its subscribers want choice, and increasingly value online options. Cox is taking this step because it is confident that its VOD library will stack up well compared to what's available online, thereby mitigating competitive concerns. The sentiment around online choice echoes what was behind a recent deal between Clearleap and Roku, which will extend VOD library viewing to Roku boxes (and soon other connected devices as well).
Still, the seamless toggling to Netflix again underscores the risk Epix is taking on with its new distribution deal with Netflix, just announced this week. Ironically, Cox is one of the few pay-TV providers that have struck carriage deals with Epix. Now Cox's Epix subscribers who also subscribe to Netflix will have the same content available twice through the same box, albeit when via Netflix it will be delayed by 90 days and not in HD, when it is available. As I wrote yesterday, savvy consumers are inevitably going to understand this redundancy and, I would argue, begin to pare back their Epix subscriptions (note, Starz, which also has a Netflix distribution deal, bears a similar risk).
Together, the Cox-TiVo and Epix-Netflix news are a formidable reminder that online video distribution is prompting some strange bedfellows. While it's tempting to believe that traditional and online distribution are direct competitors, the reality is that necessity and creativity may be bringing them together in quite unexpected ways.
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