Netflix has made a huge leap in its business model development by making its first-ever deal with a pay-TV provider. The over-the-top darling has signed on with Virgin Media in the U.K. to be integrated into the cableco’s TiVo (News - Alert)-supplied set-top boxes.

Virgin Media, purchased this year by John Malone’s Liberty Global, said that it will start testing Netflix with 40,000 customers who have a TiVo STB, with all 1.7 million of its TiVo users (44 percent of its base) gaining access by the end of the year. Virgin Media (News - Alert) customers will be able to search for Netflix shows using the same on-screen programming guide they use for the traditional TV content.

For instance, a Virgin Media customer searching for a certain actor would see relevant linear programming choices, side-by-side with fodder from Virgin Movies and also Netflix.


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Virgin isn’t taking over the billing however: the feature still requires a Netflix subscription.

“We’re delighted to be bringing yet another groundbreaking service onto TV screens in millions of Virgin Media homes,” Dana Strong, Virgin Media’s COO, said in the statement.

Netflix is widely available on a range of connected devices, often via dedicated apps. Connected TVs, gaming consoles like the Xbox and PlayStation 3, Blu-ray players and dedicated streaming boxes all offer the ability to stream the service to a TV. But inclusion in an operator STB could drive a big uptake in usage: it bolsters ease of use for consumers, who will no longer have to switch inputs in order to access Netflix. And, the inclusion of the service in the programming and discovery guide also keeps Netflix top-of-mind for television-watchers.

For Virgin Media, the deal underscores its efforts to expand the proposition for its broadband service. Integrating streaming services into its overall value proposition allows it to control the competitive conversation vis a vis OTT players as potentially complementary partners, rather than competitive threats.