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Why Did Netflix Integrate with TiVo?

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Dec. 2 2016, Updated 10:04 a.m. ET

Netflix button on TiVo set-top box

On November 29, FierceCable reported that a Netflix (NFLX) button will be added to TiVo’s (TIVO) remote controls of set-top boxes as a part of a licensing agreement between the two companies. TiVo sells these set-top boxes to pay-TV operators and in retail stores. According to the report, this agreement will extend to the North American market.

As part of this agreement, Netflix also acquired licenses to various patents, including “technologies from holding company Intellectual Ventures, which signed an earlier deal to pool its patents with TiVo/Rovi.” Earlier this year, TiVo was acquired by Rovi for $1.1 billion.

The FierceCable report also cited Bill Holmes, Netflix’s global head of Business Development, who stated that the agreement will result in Netflix subscribers gaining access to its content “whenever and wherever, with an integrated experience across more devices.”

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Netflix’s integration with X1

In July 2016, Netflix (NFLX) and Comcast (CMCSA) entered into an agreement to provide Netflix on Comcast’s X1 set-top boxes. Netflix is expected to become available on Comcast’s X1 set-top boxes later this year.

In its 3Q16 earnings call, Netflix was asked whether it expected its integration with Comcast’s X1 set-top box to be a strong contributor to subscriber net additions in 4Q16. Netflix replied that it hoped that would be the case. The company added that many of Comcast’s X1 set-top box users are high-income households who also subscribe to Netflix. However, the integration of Netflix on X1 will make it easier for these users to use Netflix.

At the Goldman Sachs Communacopia Conference in September 2016, Netflix (NFLX) stated that the important part of the deal with Comcast is the convenience it offers consumers. Netflix clarified that it was “agnostic” towards Netflix subscriber streams videos, as long as it’s convenient for the subscriber and doesn’t provide a negative viewing experience.

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