A TiVo/Netflix Hookup?

Has the moment that TiVo (NASDAQ:TIVO) and Netflix (NASDAQ:NFLX) investors have been waiting for finally come to pass? Well, speculation has turned to rumor, which many obviously hope will turn to fact. According to Newsweek, these two disruptive companies will join forces to bring downloaded movies via the TiVo box. Is it too good to be true?

Now, Newsweek felt good enough about reporting this rumor to issue a press release publicizing the article. It's important to note that the companies' spokespeople refuse to comment on what one specifically dubbed a rumor, while the anonymous source for the article, described as an insider close to the negotiations, said it's "all but a done deal."

Back in June, I hoped for such computer-to-TiVo innovation when I penned The Little TiVo That Could. TiVo's easy-to-understand interface would make a perfect bridge from PC to television. At the time, when I wondered whether TiVo could present a challenge to Netflix, many readers suggested that the two companies could strike a powerful accord and together bring even more immediacy to video.

Indeed, the ability to download Netflix movies over the Internet for playback via a TiVo machine would be brilliant. I can admit, as a TiVo subscriber, I'd likely be a shoo-in (not to mention I'd probably rapidly become a shut-in) for such a service through my TiVo box. Both companies are known for making entertainment options easy.

Along the same lines, Business 2.0 recently pointed out that TiVo's recent acquisition of Strangeberry -- a software company that comes equipped with programming guru Arthur van Hoff -- further solidifies the idea that TiVo could go far beyond simple recording and time shifting of television.

Of course, TiVo's crowd of competitors and the fact that Blockbuster (NYSE:BBI) has finally gotten smarter mean both TiVo and Netflix can't tarry as they move on to the next phases of their businesses.

Today, though, there are reasons for concern, not least of which is the fact that this is still very much a rumor, and therefore buying shares is a risk. In terms of what both companies need to accomplish to narrow their losses, bolster sales and subscribers, and fend off rivals, the story sounds good... but let's just hope it's not too good to be true.

Check out some more recent TiVo coverage:

• TiVo a Go-Go, by Rick Munarriz
• TiVo Turns on the Charm, by Alyce Lomax
• FCC Gives TiVo the Go, by Rich Smith

TiVo is a Motley Fool Stock Advisorpick; Netflix was once, but is no longer. Check out which companies get the Gardners' seal of approval. Or, talk about the rumors on the TiVo or the Netflix discussion boards.

Alyce Lomax does not own shares of any of the companies mentioned. As much as she's crazy about her TiVo, she hasn't been too fond of the TiVo print ads she's seen around lately.