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Virgin Media lets Netflix into its TiVo hybrid service

U.K. cable operator Virgin Media (opens in new tab) is testing one way to combat the Netflix (opens in new tab) cord-cutting threat by admitting it to its own service. Virgin Media is running a pilot with 40,000 of its TiVo hybrid set-top-box subscribers, allowing them to access Netflix movie and TV show content by downloading an app. Currently, subscribers that are invited to participate in the trial have to subscribe to Netflix for £5.99 (almost $10) a month, but Virgin Media plans to extend it to all its 1.7 million TiVo customers by the end of 2013 and, at that stage, may well include it within its own pay-TV bundle.

The precise terms of the deal have not been revealed, so it is not clear whether Virgin Media gets any of the money from subscriptions to Netflix taken out as a result of users downloading the app. But the deal makes absolute sense for Virgin Media, because it is a pure content retailer that owns no rights and is not involved in any programming. The Netflix deal follows Virgin Media’s addition of BT’s new sports channels to its service last month, and adds to Virgin Media’s existing collection of more than 6000 hours of on-demand content.

Virgin Media also provides access to other selected OTT content such as YouTube for its premium TiVo subscribers, which now account for almost half of its total 3.7 million pay-TV subscriber base. Virgin Media developed the hybrid service jointly with TiVo for launch in December 2010, with linear channels delivered over the HFC QAM infrastructure as before, but OTT content coming “through the middle” in a ring fenced portion of the DOCSIS broadband access circuit, so that it does not conflict with Internet browsing.