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We heard early rumblings, but when it comes to TiVo (NASDAQ:TIVO), you never quite know which rumors will turn out to be true. As it turns out though, TiVo and Amazon (NASDAQ:AMZN) actually have been in negotiations to bring Unbox to TiVo subscribers and they are almost ready to roll it out.

It goes into testing today, but initially it will only be in a few hundred homes. In order to use the service, customers will need to first purchase their movies directly from Amazon’s website. Even though you can download the movie right to your desktop, you’ll still need to download the film directly to the TiVo box because TiVo needs to use a different codec on their linux box.

Amazon allows you to download 2 copies of any film without any additional cost, but because of the system’s dependence on downloading, it means you’ll still have to wait to see your content. I would have preferred to have access to streaming content instead, especially given that it’s already connected to my TV set, but hopefully we’ll see something like that introduced further down the road. TiVo refused to give a timeline on the broader rollout, but it would certainly make a nice update, if it could enable it at the same time as when it launches TiVoCast for its series 3 boxes.
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This is an exciting development for TiVo and is a great feature to be able to offer its subscribers. With Series 3 owners having been forced to give up access to pay per view, the addition of the content helps makes for a better trade off. Amazon’s movie selections is still pretty limited, but hopefully as the studios become more comfortable with internet distribution, we’ll see more content show up.

I tried out Amazon’s Unbox service when it first launched, but watching it on my computer and having to wait 6 hours to download a DRM file was a huge turn off. With TiVo, Amazon solves the problem of getting the content to my TV set, but I think it would have even more success if it could offer instant streaming access.

As a heavy movie renter, I’d prefer to see Amazon adopt an all you can eat subscription model instead of a la carte, but until it has more content, I’m probably still better off with a la carte pricing. As the service develops, it will be exciting to watch what content becomes available. I hate catching old reruns on the cable channels because they are always out of order and you’re never sure if you caught every show, but if Amazon starts licensing more television, I’d definitely pay to go back and watch all the A-Teams from the start. Being able to use TiVo not just to fast forward the commercials, but to rewind to the past, will be a huge enhancement to service, especially as the content becomes more robust.

The potential for TiVo to be a platform for delivering on demand movies has always been there, but TiVo’s never been good at getting the movie studios to play nice. By partnering with Amazon for the content, TiVo has put itself into a position where it can take advantage of Amazon’s clout to help bring premium content to its users. When TiVo tried to license films with Netflix (NASDAQ:NFLX) two years ago, the studios freaked out. When Netflix couldn’t get the deals in place, the partnership dissolved. Hopefully, at some point we’ll see TiVo open up its software so that any internet site that offers films or video content can show up, but in the meantime, bringing Unbox to the TiVo community is a great first step.

Disclosure - I own stock in Netflix, Tivo.

TIVO vs. AMZN 1-yr chart

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Source: Starting Today, TiVo and Amazon Bring UnBox to TV