Cable Industry Grooms Its Netflix Killer: Vutopia

It’s trendy nowadays to challenge Netflix (NSDQ: NFLX), whether you’re Amazon or OnLive. Little did anyone know that the nation’s cable operators are already far along in development of a Netflix killer of their very own.

Meet Vutopia. Like Netflix, it’s a trove of hundreds of catalog movies from major studios accessible via TV and internet. In addition, it’s packaged as subscription VOD, which means one monthly price to watch all the movies you want. The website is far hipper than the stodgy user interface offered by most cable systems, complete with a “mood”-centric title searching.

One predictable twist on the Netflix model though given Vutopia’s provenance: it’s available only to authenticated cable subscribers.

For much of the year, Vutopia has been quietly rolled out across the entire footprint of Cox Communications, about 50 percent of Time Warner Cable; (NYSE: TWC) Comcast Corp. (NSDQ: CMCSA) will do same in 2011. Not coincidentally, these companies are three of the four cable operators (along with Bright House Networks) that operate the creator of Vutopia: In Demand, which is better known for supplying content to cable’s transactional VOD platform, Movies On Demand.

While the cable industry isn’t keen on actively playing up Vutopia as the answer to Netflix, In Demand president Bob Benya hinted as much last week at an Independent Film & Television Alliance conference in Los Angeles. “In terms of developing something that competes with Netlfix, there is a lot of things that cable has that Netflix doesn’t have,” said Benya, citing content like real-time news and sports. “Vutopia is another subscription service that, with the totality of what cable provides, is the competitive response to Netflix and other products as well.”

Benya expanded on his comments in a follow-up interview, explaining that In Demand began creating Vutopia nearly two years ago for several reasons. The industry was going to need multiplatform content to fulfill its TV Everywhere mandate and the company’s research indicated that consumers wanted more than the a la carte titles In Demand was delivering.

“One of the things we learned in the development process is that folks wanted flexibility,” said Benya. “They wanted movie content that was not just transactional, they wanted a nice big package of good movies, even if just library.”

That required a separate set of licensing agreements, which In Demand has only struck to date with studios Warner Bros. (NYSE: TWX) and Sony (NYSE: SNE) Pictures, as well as some select independent sources. Benya said they’ll look to expand its content holdings next year, though it would take time to catch up to the breadth of Neflix, which also offers TV programming.

Oddly enough though, neither Cox nor TWC has positioned Vutopia as the standalone SVOD package it could easily be. Both companies have embedded Vutopia into digital movie tiers along with similar brands including Epix and Fox Movie Channel at varying prices on par with Netflix. Last month, Cox took the additional step of using its Movie Pak (on which Vutopia resides) as an incentive to get subscribers to sign up for its “Unbelievably Fair” quadruple play package, which is about as close as Vutopia is to being marketed as a multiplatform programming option.

Benya is hopeful to see different ways of deploying Vutopia, which affiliates are free to rebrand, price and configure as each sees fit. The product is still in its early phase, but is it too late to compete to Netflix? Next year will be a critical period to see if Vutopia can ramp up in order to catch up.