How TiVo Can Save Itself

TiVo is in trouble — or at least that is the conventional wisdom.

Despite the fact that the company has brand recognition that not even Kleenex could sneeze at, time-shifting TV programs is simply too basic to build a business around.

Consumers are flocking to the free digital video recorders provided by their cable operators, and investors are heading for the hills — analysts like GARP Research have told their clients to avoid the stock.

Why, on this very site, my colleague Jim Louderback wrote an official eulogy for his beloved TiVo just a few months ago. Clearly, the future lies outside the TiVo box.

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Since my recent acquisition of an HDTV, I have been conducting an experiment.

Although I have tested the TiVo before and enjoyed it immensely, for the last few months I have been using instead my cable provider's high-definition DVR.

Most consumers are doing this these days, because renting a DVR from cable providers is easy and requires no up front cost.

Cablevision charges $17 for the service ($7 per month for the digital box and $10 per month for HD DVR service); the box itself is free.

Pretty good, considering that the cheapest HD TiVo still costs $300 and requires the use of a CableCard, a technology which, despite its long time on the market, remains inscrutable.

The choice sounds like a no-brainer, right? Not quite.

My rented Scientific Atlanta Explorer 8800HD does a passable job of recording my programs, but it is no TiVo.

It is slow and hard to use, and it stumbles when I try to perform even the most basic of tasks, such as recording a program without the precise channel and time information.

I have been trying to record the design show Dwell for the last two weeks. (What can I say? — my apartment needs work.)

The DVR simply won't do it unless I manually scroll through the entire week and find the exact show time. It is absolutely maddening.

The moment I concluded that there was no way around doing it manually was the moment I decided that TiVo is poised for a serious comeback, as long as it follows a few simple rules.

Play nice with cable providers. Competing with the cable companies is where TiVo ran into all of its problems. It needs to play nice.

The company recently won a major patent case against Dish and EchoStar. Now it is poised to collect license fees from nearly every DVR on the market.

Collect your cash, but don't push it. The goal is to get into more homes and collect a small monthly fee from a ton of users, not push the cable operators into investing in another technology platform.

Indeed, Comcast is rolling out TiVo-branded boxes in New England; Cox is going to do the same in Rhode Island and Connecticut.

Keep that going. Any telco not offering TiVo is at a disadvantage.

Be a software vendor. The thing that made TiVo great wasn't the hard drive inside it, it was the TiVo interface and back-end software. Put your R&D money there and start pushing your lead again.

The TiVo is the most successful piece of living room software ever written. Build on the software and forget about the hardware. (Except for that dog-bone remote control; that is too cool to let go.)

Don't just watch TV. TiVo has always been willing to support new media. It signed a deal with Rhapsody to deliver music, and it just started offering access to YouTube videos. TiVo could be the hub in the next-generation smart home.

Be social. With nearly four million very engaged subscribers, TiVo has one of the most active social networks around. The company already lets users make recommendations and share videos.

TiVo should evolve as a platform for members to talk about programs, create their own content and share media. Playing up the community aspects of its business means real money.

The company is already offering next-generation marketing tools, allowing networks and advertisers to get phenomenal amounts of information about its members' viewing habits.

Even if TiVo follows this plan, it still has some competition.

Windows Home Server appliances are just starting to hit the market in large numbers, and all of them come with huge hard drives just waiting to be loaded with audio and video.

Right now, all of that is sitting on the family computer, relatively far away from the HDTV in the living room.

When and if Microsoft ports the Media Center interface to the Windows Home Server OS, the company will have a killer platform that will do everything the TiVo can and more. Luckily for TiVo, Microsoft has been slow to make this move.

I do have an ulterior motive for writing this column. Right now, using a TiVo box — assuming I can get CableCard to work — means losing about half of my high-definition channels. That isn't a trade-off I am willing to make.

If TiVo could make nice with Cablevision, I could have my high-definition Dwell and watch it, too.

I know Jim, and a lot of industry watchers, have declared that the TiVo's time is over, but that is the beautiful thing about TiVo — you can always hit rewind.