NEW YORK – Amazon.com Inc. (AMZN) launched on Wednesday a service that lets users watch video purchased on the Internet and sent to a home television hooked up to a TiVo set-top box.
Originally announced last month, "Amazon Unbox on TiVo" extends the online retailer's Unbox download service to more than 1.5 million TiVo Inc. (TIVO) subscribers whose boxes can access the Internet via a high-speed connection.
TiVo shares rose as much as 5 percent Wednesday after the Amazon launch was announced. Last month, analysts said the service shows content companies may be embracing TiVo as both a potential partner and a distribution platform.
Under an introductory offer, TiVo is offering $15 in free movie and TV show downloads to those who sign up.
Television show episodes go for $1.99, and most movies cost between $9.99 and $14.99. Amazon and TiVo are jointly shouldering the marketing cost for the new service's introduction.
The service comes as media and technology companies experiment with new ways to court viewers who split their time between viewing traditional media, surfing the Internet and playing video games.
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By going directly to the TV, Amazon's TiVo partnership takes downloads a step further than online video stores such as those of Wal-Mart Stores Inc. (WMT) and Apple Inc. (AAPL), which are geared toward PCs or portable devices.
PricewaterhouseCoopers says the Internet video download business is expected to be worth $3.7 billion in annual revenue in 2010.
But TiVo has a long way to go to compete with Apple, which has sold millions of iPods than can download video from iTunes.
Only about 600,000 users have hooked up their TiVo box to a broadband connection, but Tara Maitra, Vice President of Content Services at TiVo, says that is "a positive."
"The rate at which we went from zero to 600,000 has happened very quickly. Something like 60 percent of new boxes are connecting, so certainly the level of interest for having the TiVo on a home network is growing," she said.
For TiVo, Unbox adds another feature that differentiates its video-recording technology from generic digital video recorders offered by cable and satellite providers.
Under the Unbox service, viewers must buy their video, or pay for the rental, from PCs. TiVo downloads will count against a two-PC limit on Unbox purchases, though Unbox users can still download the shows to two handheld devices.
Shares of TiVo, which is expected to report its quarterly results later on Wednesday, were 26 cents higher at $6.20 in early afternoon trading on Nasdaq, after climbing as high as $6.25 early in the session.