Internet DVD renters Netflix and digital video recorder makers TiVo plan to develop a way to download movies online together, the two companies said in a Sept. 30 announcement that caused shares of both companies to jump in after-hours trading.
TiVo chief Mike Ramsay told reporters Netflix would arrange the licensing from Hollywood filmmakers and TiVo would work on the technology under the partnership. Neither TiVo nor Netflix suggested just when the service might become available.
But some analysts, noting the stock jumps for both companies [TiVo shares rose seven percent, Netflix five], warned that the project won't be as easy as it sounds to say it. "There is going to be a lot of excitement about a potential service," said American Technology Research analyst Rob Sanderson to reporters, "but it is going to come down to licensing and distribution rights, which may be more of a challenge than many people on Wall Street really understand."
Wall Street has seen both companies as high-enough flying firms because of their home movie and television viewing technologies and businesses, but Netflix this year has seen market threats since Wal-Mart decided to go into the DVD-by-mail business, and TiVo has seen threats from cable companies offering their own personal recorders that also store data on computer hard drives.
But don't look for this partnership to mean a merger between the two companies just yet, warned Ramsay, who concurrently quit his seat on Netflix's board of directors. "I can stop that rumor right here," he told reporters. "The reason I resigned… is that we now have a commercial relationship with Netflix.
