Commentary

As Far as TiVo Business Models Go, This One May Not Make Your Favorites List

Don't look for the story of TiVo to be TiVoed anytime soon.

The digital recording technology company has been struggling because its main and powerful retailing partner, DirecTV, as well as competing cable operators, are looking to other digital recording technologies. Business analysts have been talking about TiVo like it wouldn't outlast its use as a verb - a bad verb for advertisers because it also connotes commercial skipping.

But there is some hope.

In this week's Newsweek, said Netflix, a company with the most un-technological approach to videos on demand (they send DVDs via mail), could help TiVo survive not only as a profane utterance among marketers but also as a long-term business entity.

Netflix, in a possible video-on-demand deal, would send its DVD movies to TiVo boxes in consumer's homes. The positive for marketers is if that portion of the business grows, there'll be no need for TiVo users to skip commercials on sitcoms, reality shows, and dramas. (But they'll probably skip the director's comments on the movie download).

Brilliant. Well, almost.

Hollywood studios would be loath to let their content enter a VOD window without their approval, or more money. Even then it would set off a domino effect - hurting existing movie Internet sites, Movielink and CinemaNow, which let users download films. (Movielink is co-owned by the five major studios.) A Netflix deal with TiVo, would make it far easier for consumers to view movies on TV than via the Internet - especially since most U.S. computer users don't have broadband access.

The mystery news is that both Netflix and TiVo's struggling stock prices rose yesterday -- Netflix stock was up 7.3 percent at $15.41, while TiVo shares rose 14.9 percent to $5.08.

So the question is -- what really happened? The VOD window problem and the competition with studio-owned Internet sites is an obvious and glaring flaw in this business deal. Institutional investors aren't typically sold so quickly. Is there something else going on - perhaps a merger in the works?

One can only consider the story might continue today -as possibly investors make a nice little day-trade profit gain from a nice little Newsweek story.

The swearing among marketers could then continue.

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