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Virgin Media, a leading cable TV operator in the U.K. and a wholly owned subsidiary of Liberty Global plc. (LBTYA - Analyst Report), has decided to offer the video-subscription service of the online video streaming service provider Neflix Inc. (NFLX - Analyst Report). With this, for the first time in the global pay-TV industry, web-based service will be integrated into cable system.

Initially, Virgin Media will test run the Netflix service with its 40,000 subscribers who use the company’s next-generation set top boxes developed by TiVo Inc. (TIVO - Analyst Report). This new converged digital TV platform provides improved graphics, on-demand video content, catch-up TV service, web-based applications including games and personal video recorder.

This set-top box integrates the Internet and live TV on one screen through fiber-optic cable. At the end of the second quarter of 2013, Virgin Media had approximately 3.77 million subscribers of which nearly 44% uses TiVo set-top boxes.

Virgin Media is already offering an innovative video service called TV Anywhere. This application platform enables the company’s subscribers to watch up to 45 live TV channels on several devices including TVs, PCs, smartphones and tablets. This simply means that customers can view live TV shows even outside home using their mobile devices. Furthermore, using this application, subscribers can manage recorded programs and control TiVo-developed set-top boxes from a remote place. 

Throughout the world, pay-TV operators are facing severe threat of cord cutting by their subscribers. Moreover, nowadays, consumers prefer laptops, tablets and smartphones to TVs to watch videos.

As a result online video streaming operators are gaining momentum. With TiVo set top box, Virgin Media can offer both pay-TV and Internet-based streaming contents. This will be a major competitive advantage over its rivals BT Group plc. (BT - Snapshot Report) and British Sky Broadcasting Group plc.

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