Online-video aggregators such as Hulu and Netflix (Nasdaq: NFLX) are "here to stay" and will increasingly be offered by traditional pay-TV operators alongside those operators' own services, TiVo (Nasdaq: TIVO) CEO Tom Rogers told investors at the Goldman Sachs Communacopia conference Tuesday. TiVo's recent deal with Virgin Media in the U.K., which brought Netflix's app onto a cable-operator-leased box for the first time, could serve as a template for similar partnerships in the United States.
"That will play out more and more," Rogers said. "Until it does, there are risks for the operators... and for over-the-top aggregators," he said. Traditional pay-TV operators risk losing subscribers to over-the-top competitors, he said. And those aggregators such as Netflix risk bumping against a subscriber growth ceiling. That's because a significant portion of traditional pay-TV subscribers may not consider adding a service like Netflix unless it's available through their operator-leased box, Rogers said.
But TiVo executives are somewhat skeptical of the notion that a virtual cable operator will emerge to deliver a compelling and competitive broadband-based pay-TV service. Beyond issues such as access to programming and programming costs are broadband pricing, he said.
A broadband "virtual MSO" would "set up a rationale for the operator to price that [broadband] pipe in a way that's commensurate with the usage," Rogers said. "That would probably make the third-party virtual MSO package far more expensive than the operator's."
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