Thinking Outside The Box, TiVo Unveils Network Plans: Home Networking

TiVo Inc. made more aggressive moves for its future, unveiling service enhancements that will further the DVR marketer's goal of becoming not just another TV box, but the epicenter of household entertainment, as well as plans to use broadband Internet to connections to download content to TiVo hard drives.

Although TiVo seems to have been hit from many sides in recent weeks, with a faltering stock price amid worries that its crucial distribution and marketing partnership with DirecTV could be numbered, little of that was in evidence Wednesday evening when many of the DVR pioneer's top executives entertained a couple hundred media professionals and journalists at Manhattan's posh Four Seasons restaurant. The party seemed to show that, despite the company's trials, it's looking toward the future.

It's a future that TiVo has never been afraid to embrace, whether it was to push the digital video recorder into the nation's consciousness, out-maneuvering a one-time challenger (ReplayTV) and a heavily funded Microsoft attempt to get into the business (UltimateTV), or simply surviving analysts' predictions that it wasn't going to survive in a world of commoditized DVR set-top devices. The most recent concern over TiVo's future happened in the past few days, when a top DirecTV executive resigned from the board and the satellite TV company sold its stock in TiVo.



The company has ambitious plans to gain 10 million subscribers by 2008, a far cry from the 1.6 million it has today. With its flurry of announcements Wednesday TiVo sought to show Madison Avenue it was also responding to its needs with creativity and verve and plans to pioneer the next wave in consumer entertainment technology: the convergence of TV and the Internet.

"We're broadening way beyond DVRs and we're looking for other forms of entertainment," said Michael Ramsay, chairman and chief executive officer.

That includes being able to use broadband Internet to deliver video streams to TiVo customers, thanks to technology developed by a company called Strangeberry, which TiVo purchased earlier this year. A TiVo spokeswoman said broadband applications wouldn't be available immediately.

TiVo's plans to send content to the set-top box mirrors similar plans that are being worked on by other companies in the video and interactive industry. In an interview with MediaDailyNews, TiVo Executive Vice President-General Manager Brodie Keast said the company believes the best place to house content like digital photos, music and video is a TiVo-connected home entertainment center. He acknowledged that others are trying to offer DVR functionality via the computer but that he didn't think it would appeal to the broad range of consumers. Ironically, some developers are pushing technology that gives PCs DVR capabilities.

"The computer is not the best place to deliver a great entertainment experience," Keast said. TiVo's advantage, he said, is that it can connect to a consumer's home theatre system and make it much easier -- and viewer-friendly -- to use the content.

Keast said TiVo has always been built around consumer choice and control, bringing the ability to record and time shift programs to the masses.

"We view broadband as an extension of that," Keast said. At some point soon, possibly as early as next year, TiVo will be able deliver content directly to its boxes via broadband Internet.

To that end, TiVo will unleash the power of home networking -- previously a $99 add-on option -- for its entire subscriber base. It includes online scheduling, multi-room viewing of recorded content (via other TiVo units), a digital music player and digital photo viewer. TiVo has also lowered the price of its 40-hour Series 2 units to about $129, which Keast said was to make it more affordable for consumers and to lower the cost of entry.

While the monthly subscription charge will still remain $12.95 a month, Keast said that another future enhancement -- the TiVoToGo ability to burn DVDs of TiVo content for saving or viewing elsewhere -- will be offered as part of the standard service.

TiVo will also lower the cost of subscriptions for additional TiVos in the household to $6.95 a month, essentially half off with an existing TiVo subscription.

Addressing the DirecTV situation, Keast said that TiVo's service has helped the satellite provider with subscription acquisition and retention. He said that TiVo fully expects that they will have competition for DirecTV but that TiVo has faced competition before, including from Microsoft Corp., and prevailed.

"It will be competitive. It always has been," Keast said.

But he said that the TiVo-DirecTV partnership benefits both sides.

"We feel we bring a lot of advantages" to the DirecTV relationship, Keast said. He said that as long as TiVo serves DirecTV's needs, there's a future to the relationship. He acknowledged that TiVo continued to talk to cable companies about a possible partnership but said that it wouldn't make a deal just to make one. It would have to be right for both parties, Keast said.

For advertisers, TiVo is also planning enhancements to its service that include not only the long-form showcases it's become famous for but also an enhanced 30-second advertisement that will allow marketers to tag a spot so that it can send viewers to a call to action immediately while the DVR set-top box pauses the live or recorded content being played.

It will eventually be used for lead generation or survey capabilities and targeting by DMA or ZIP code although that's still the future, said Davina Kent, TiVo's advertising and research sales manager.

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