Deal will deliver movies directly to TVs

Long before its rivals, Netflix spelled its future V…O…D. But the pioneering rent-by-mail service has struggled to make headway in the digital arena, forced to watch as others have launched their own Internet-based services and DVD lost its luster.

Now, however, topper Reed Hastings feels the timing is finally right for the company’s video streaming service. The Netco, which inked a series of partnerships in recent months, finally began testing movie streaming through TiVo set-top boxes last week — some four years after it originally announced intentions to do so. The deal, considered a no-brainer back then, ran into licensing and tech roadblocks and never came to pass; in the intervening years, both Netcos have been busy making deals with other partners.

Although it comes with certain restrictions — users must have both TiVo and Netflix subscriptions — it does deliver movies directly to TVs, without requiring users to buy another set-top device. Hastings, who concedes he was overly optimistic in the past, suggests the market has at last caught up to his ambitions.

Certainly, the company offers a growing number of ways for users to stream movies, including through Microsoft’s Xbox Live and via the Roku set-top box. But the company still faces obstacles: Apple quickly took command of the digital movie arena after inking rental and sales deals with all the majors earlier this year.

And the biggest — and most unexpected — hurdle may be the faltering economy: The Netco, which had been confident about its ability to withstand a recession, recently conceded that the downturn appears to be taking a toll on it subscriptions.

All the more reason for Netflix to tout its new service, which removes pesky shipping and handling costs. The Netco expects the alliance, which it’s testing in several thousand households, to become more broadly available in early December.

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