TiVo Re-Entering UK With Co-Branded Virgin Media Box In 2010

Virgin Media (NSDQ: VMED) is tapping TiVo (NSDQ: TIVO) to develop the middleware and interface for its forthcoming line of “television and broadband” set top boxes, marking the DVR maker’s return to the UK after six years. More than that, Virgin is calling it a “TiVo co-branded product”.

Cable provider Virgin Media’s EPG remains almost as flaky as that it inherited in the ntl merger and, since Virgin has been spearheading the popularisation of living-room VOD TV in the UK (66 million monthly VOD views), the number of menus and options has been proliferating.

Virgin says TiVo will develop the software for its “next-generation” HD boxes, both those equipped with its V+ DVRs and those without DVRs.

TiVo entered the UK by building athe Thomson PVR10UK box with Thomson Multimedia and BSkyB (NYSE: BSY) in 2000 but exited the market in 2003 after reportedly selling only 35,000 boxes in 18 months as Sky launched its own Sky+ PVR.

OpenTV-powered Sky+ remains the UK’s PVR of choice, but its VOD-from-the-network capabilities are limited by Sky’s inability to offer pull-VOD over satellite. It’s aiming to offer true pull-VOD via its box’s broadband connection next year, so now Sky and Virgin, which has a fast cable network, are squaring up again.

Virgin CEO Neil Berkett in May told analysts: “We are developing a prototype interface that combines traditional broadcast TV content with on-demand programming, web-based entertainment and interactive features in a simple and user-friendly format.” Virgin released a mock-up of the interface in June, but it now seems to have switched away from in-house development from Virgin, to a company that has a good track record in the space.

Update 1: Investment bank Lazard Capital Markets estimates the hookup as a “$48 million deal” for TiVo, saying “the deal is multi-year, substantial, and has minimum guarantees”.

Update 2: Following a trial, Virgin is now also deploying “dynamic” advertising (30-second pre- and post-rolls matched to programmes) around Living, Virgin1 and Bravo VOD shows on its cable platform, with ads for brands like L’Oreal, Sony (NYSE: SNE) Ericsson (NSDQ: ERIC), Kelloggs and Microsoft (NSDQ: MSFT) sold in by Virgin’s IDS sales house.

Update 3: From a Tivo SEC filing, some language on the Virgin deal: “The monthly fees, which commence upon delivery, are guaranteed and increase over time. The agreement has a multi-year term with additional limited renewal rights granted to Virgin. The agreement creates a mutually exclusive distribution arrangement under which TiVo will develop software for DVR set top box platforms and non-DVR set top boxes that will be deployed in the future by Virgin in the United Kingdom. Virgin Media will promote the product and will have exclusive rights to use the TiVo brand and technology in the United Kingdom. As part of the agreement, Virgin Media and TiVo have entered into a mutual covenant not to assert with regards to each party