TiVo no longer stand(s)alone

The DVR company makes its move in cable.

Praise of cable giant Comcast's New England rollout of TiVo's digital video recording software has come with a number of caveats: It's an important step in TiVo's cable strategy, but still just a first step; there is demand for the product, but it is not compelling at this point. TiVo is on the right path with its cable strategy, but it is going to take awhile to regain a strong foothold.

“This is the proper strategy and a strategic priority for TiVo to see some payoff,” said Mike Paxton, analyst for In-Stat. “I think it is a good strategy, but it's a long-term strategy.”

According to TiVo, its product development right now is oriented toward cable. Comcast, with more than 24 million subscribers, will be the first U.S. cable operator to offer the TiVo interface, and Cox Communications signed a similar deal in 2006 that is expected to launch this year as well.

TiVo's strong cable push comes as little surprise. Most of the company's 4.4 million subscribers came from its partnership with satellite provider DirecTV. When DirecTV announced last year that it was stopping sales and marketing of TiVo's DVRs to instead develop a device with NDS Group, TiVo was forced to re-examine its core business model.

Now, two years after announcing a partnership with Comcast, the companies are finally deploying TiVo's DVR software in set-top boxes to Comcast's New England region, giving consumers a choice between the multiple systems operator's generic DVR offering and TiVo (marketed as a premium service). Comcast is initially offering TiVo on Motorola set-tops, but plans to install the software in Scientific Atlanta boxes as well. James McQuivey, principal analyst for Forrester Research, said that the move was a smart one for both Comcast and TiVo.

“Comcast is the right partner because it is the largest,” McQuivey said. “Also, [Comcast is] investing very heavily in delivering new services to people. Boston is also the right market because the competition right now is tremendous with Verizon going head-on after Comcast subscribers with its Verizon FiOS service.”

His primary concern, like Paxton's, is that consumers won't see the value of paying for an additional TiVo service on top of what they already pay. McQuivey said that both the price of the service and Comcast's marketing of it are what will determine the uptake rate.

“People are generally so happy just to be able to pause and record live television and skip commercials that they don't really recognize the added power that TiVo's sophisticated interface can provide,” McQuivey said.

The impact TiVo will have on the cable market and vice versa remains to be seen. For now, only carefully worded projections can predict if TiVo will thrive in the cable industry or be forced to beg DirecTV for another chance when it changes ownership at the end of the year.