TiVo Tests Internet Download Service

Monday, August 15th 2005, 9:48 am

By: News On 6

SAN FRANCISCO (AP) _ Add TiVo Inc. to the list of companies trying to wed the Internet to television. The digital recording company will soon allow customers to download TV shows to their set-top boxes via the Internet _ even before the shows air on TV.

TiVo has struck a deal with the Independent Film Channel to transmit several of the cable channel's shows through a broadband connection as part of a trial program. Participating customers will begin receiving the shows next week, said TiVo spokesman Elliot Sloane.

Sloan confirmed that TiVo sent messages to its customers _ later posted on the technology Web log Engadget.com _ offering to transmit three IFC shows beginning Aug. 19, before they aired on the cable channel.

Content on demand has long been a holy grail for Internet and cable companies as they hunt for the next generation of television. No one yet has found a way to overcome the considerable technological hurdles, such as finding a speedy way to pump two-hour movies through broadband, or convince Hollywood that its content won't be pirated and that it can profit from Internet broadcasts.

Still, Internet connections are picking up speed and moving closer to a reliable delivery method for broadcast-quality video. Should the day come that video is downloaded at the touch of a button, some stakeholders foresee a vast video universe of endless variety.

TiVo has offered its 3.3 million customers a form of watch-what-they-want, when-they-want-it luxury since it launched in 1997, but the service remains restricted to broadcast schedules, and customers must program their set-top box to record shows.

Right now, fans of the spy drama ``Alias'' must wait until weekly episodes are broadcast on ABC. Conceivably, an Internet broadcaster could strike a deal with a studio to offer customers a season's worth of shows at once.

The question is, why would any studio with a hot show want to hand over its content to TiVo?

After all, TiVo's service cuts networks out of advertising revenue by making it easy for viewers to skip past commercials. And then there is the question of money, says Rob Sanderson, media analyst with American Technology Research.

``The cable and satellite companies pay an awful lot of money for content,'' said Sanderson. He cites ESPN as an example _ ESPN receives about $2.20 per month for each cable and satellite subscriber. ESPN reaches 80 million homes so that equals about $160 million a month, ``more than TiVo will do in two years,'' Sanderson said.

``The studios would ask themselves 'Who are we disenfranchising by working with these TiVo folks in terms of distribution partners? TiVo would need a lot of scale, a massive audience. They would have to offer enormous financial incentive. They have neither right now.''

The challenges have been illustrated by other companies trying to offer video downloads to computers.

Akimbo Systems Inc., for example, takes as long to download shows as to watch them, and its users must pay $199 for a set-top box and then connect to the Internet through a high-speed connection.

In comparison, Comcast Corp. offers video-on-demand at no additional charge to digital customers and requires no additional equipment beyond the digital cable box. The shows are delivered over the normal existing coaxial cable to transmit the shows over Comcast's own network.

Besides movies, Comcast offers shows from PBS, HBO, NFL Network, MTV and elsewhere. This is the kind of content muscle cable channels can flex.

News of TiVo's test was revealed a day after the company saw its stock fall more than 6 percent following a media report that DirecTV was planning to stop marketing the service to its 14 million customers. News Corp.-owned DirecTV is planning to throw support behind a competing digital recording company. About 70 percent of TiVo's customers have come from its deal with DirecTV.

TiVo shares fell 8 cents to close at $5.54 in trading Friday on the Nasdaq Stock Market.

Struggling to boost the number of its customers and facing the loss of one of its top partners, TiVo is scrambling to find new ways to appeal to the public as well as monetize its service. The company has yet to make a profit.

In recent months, the company, which built its reputation by helping users skip commercials, has begun experimenting with new ways to sell advertising.

What TiVo has going for it is a rich history of ramping up complex new systems, said Sanderson.

``Their good at bringing innovative creations to market,'' said Sanderson. ``I just don't see this one helping in the near term.''