TiVo Hopes to Sell Software to Other DVR Makers

TiVo Inc. (TIVO) Chief Executive Tom Rogers hopes his biggest rivals in the television set-top box market — U.S. cable television providers — may soon be eager customers, but analysts are not so sure.

Rogers told the Reuters Global Technology, Media and Telecoms Summit in New York this week that he hopes cable operators will be "hugely successful" in distributing generic digital video recorders, or DVRs.

In many cases, these cable DVRs — able to pause live TV and skip commercials — are distributed free, replacing TiVo DVRs that typically cost at least $200 per household.

That's fine, Rogers said, since TiVo eyes a future where it gains fee-paying subscribers without selling a set-top box.

"We want the cable industry to have as many of those DVR boxes out there as possible," said the chief executive of the TV recording technology company.

"We're a total software upgrade when you think of the cable side of our business. The more that are out there, the more we have an opportunity to roll out to, the more we have the ability for cable subscribers to become TiVo subscribers."

Set-top boxes are expected to be a central conduit to entertainment and information in the home in coming years. In addition to providing TV, they will access video on demand, link to the Internet, and draw from consumers' own stash of digital movies, music and pictures.

"It remains to be seen whether customers feel they can't live without all the bells and whistles of TiVo," said Sanders Morris Harris analyst David Miller. "The generic DVR works just fine — there is really nothing about the TiVo that isn't on the generic DVR."


Almost a year ago, TiVo announced a critical deal, valued at the time at up to $30 million over seven years, under which Comcast Corp. (CMCSA) will develop set-top boxes with TiVo services included. It will be sold as an alternative to Comcast's current DVR service, which costs about $10 a month.

"That has caused a lot of focus on the part of a lot of other cable operators who we are deep in the middle of discussions with about what we can do to also be in a position to help them" keep customers from switching to satellite TV services, Rogers said.

Analysts, however, say it may be hard for TiVo to woo cable operators who have already shelled out millions of dollars buying DVRs from leading makers Scientific Atlanta and Motorola Inc. (MOT), and licensing on-screen programming guides — also called a "user interface."

"Time Warner, Comcast and Cox [are] three major operators developing their own user interfaces and spending money on it," said Hoefer & Arnett analyst April Horace.

TiVo shares have fallen 16 percent since the Comcast deal was announced last March, hurt by a dearth of details about how it will be implemented, and skepticism about its ability to grow TiVo subscribers and yield significant revenue.

Rogers said deployment of Comcast's TiVo-powered system, which will run on Motorola boxes, would be likely be late in 2006.

"With user interfaces, the technology is not very complicated. I don't tend to believe that user interfaces are all that hard to create," said Cisco Systems Inc. (CSCO) Chief Development Officer Charles Giancarlo at the summit.