TiVo and Virgin Media have entered into a strategic partnership under which TiVo will develop Virgin Media’s next generation TV platform. Under the mutually exclusive agreement, TiVo will develop a converged television and broadband interactive interface to power Virgin Media’s next generation, high definition set top boxes. The terms of the deal are not disclosed.

TiVo will become the exclusive provider of middleware and user interface software for Virgin Media's next generation set top boxes. Virgin Media will become the exclusive distributor of TiVo services and technology in the UK.

The deal marks TiVo’s re-entry to the UK market, six years after the US group gave up selling its digital video recorders in Britain. TiVo once worked with digital satellite platform BSkyB in the UK, but Sky’s Sky+ DVRs are now based on NDS technology.

News of the deal came as TiVo posted a loss in the latest quarter as sales dropped 12 per cent. The company was coming off a big profit a year ago that was caused by a payout from a legal victory.

The company reported after the market closed November 24 that it lost $6.7 million, or 6 cents per share, in the three months ended Oct. 31, its fiscal third quarter.

It compares with a profit of $100.6 million, or 98 cents per share, in the same period last year. That figure includes more than $100 million in proceeds and interest income as a result of litigation with satellite broadcaster EchoStar, who TiVo accused of infringing on patented technology.

TiVo said it anticipates a net loss of $13 million to $15 million and service and technology revenue of $43 million to $45 million in the current quarter.