TiVo uncharacteristically quiet at TV-dominated CES

Monday, January 9th 2006, 10:37 am

By: News On 6

SAN JOSE, Calif. (AP) _ TiVo Inc., the digital video recorder pioneer, made headlines a year ago in vowing to take TV to the next level with support for high-definition video, software that can sling shows outside the box and a plan to pipe movies over the Internet.

But at this year's Consumer Electronics Show, the company was unusually quiet despite the event's major focus on big changes in how TV is distributed and watched _ something TiVo helped start but from which it hasn't consistently profited.

Fact is, rival set-top boxes often cost less but offer the same features that made TiVo a household name. And the competition is heating up.

``The standalone TiVo boxes now are facing a real challenge from the DVRs offered by cable and satellite operators,'' said Josh Bernoff, an analyst at Forrester Research. ``As a result, they have to pull back and look at who it is they are and who it is they're going after.''

TiVo says nothing should be read into its lack of activity at the gigantic trade show that ended Sunday. Its management team opted instead to make announcements late last year, said Jim Denney, TiVo's vice president of product marketing.

TiVo's news would have had trouble competing with such CES announcements as Google's that it was entering the online video store business and its deal with media companies like CBS _ as well as other Hollywood-Silicon Valley dalliances.

At the show, Alviso-based TiVo touted a deal with Yahoo Inc. where subscribers can remotely schedule recordings on the Web portal as well as view some of its content on their TVs through their DVRs. It highlighted some previously announced online services such a deal with Live365 for radio and the ability to browse and order movie tickets online on a TiVo through Fandango.

It showed off improvements to its TiVoToGo feature that will enable automatic transfers and support for Apple Computer Inc.'s video-capable iPod and Sony Corp.'s PlayStation Portable _ a move that miffed some content providers' legal departments.

In a move that might generate some revenue but appears a dubious selling point, TiVo announced plans late last year to offer a service that lets customers search for TV ads and view them on demand.

``These efforts toward product differentiation could face future legal challenges from the networks,'' Standard & Poor's analyst Tuna Amobi said in a research report. ``Also, the potential advertising opportunity could take several years to scale, if at all.''

And while companies like Google, DirecTV (with its own DVR) and Intel struck deals for major content for distributing over the Internet, TiVo pointed to its limited trials that offered material from CNET tech news, Independent Film Channel, College Sports Television and a video blog called Rocketboom.

Last year, the buzz was considerable about TiVo's plans for a movie download service with Netflix. But that's currently on ice because the DVD rental service is focusing on high-definition, while TiVo's primary focus remains standard-definition video, Denney said.

``We still have a relationship,'' he said. ``When appropriate, we will re-explore or revive that type of arrangement.''

Denney wouldn't comment on other possible deals, except to say TiVo is ``looking for content that more complements broadcast television or provides things you can get through the (regular) channels.''

TiVo also showed off a working prototype of its next-generation, high-definition capable DVR, which sports built-in Ethernet networking and USB ports, support for an external hard drive and two TV tuners. It also will be capable of acting like a cable descrambling box _ a move that should make setup and use easier for digital cable subscribers.

But it was something less than a revelation: The new box was first announced early last year to great acclaim, and TiVo isn't saying when it will be available or how much it will cost. It's expected to be a premium offering _ and TiVo could use the money.

In late November, it reported a fiscal third-quarter loss of $14.2 million on sales of $49.6 million but predicted the red ink in the current quarter would be between $17 million and $22 million. It has reported only one profitable quarter in its history.

The company's biggest source of new subscribers, a long-running relationship with DirecTV, is set to end next year as the satellite TV company switches to a different DVR platform.

The DirecTV relationship brought in 379,000 of TiVo's 434,000 new subscribers in the fiscal third quarter. In all, TiVo has slightly more than 4 million subscribers.

Last year, TiVo announced it would supply higher-end DVRs for Comcast Corp., the nation's largest cable TV company. That's still on track with the first boxes expected to be available in mid- to late-2006, Denney said.

But deals with cable and satellite companies and steeply discounted hardware make the standalone DVR business very tough, said Anthony Wood, who founded TiVo rival ReplayTV and later started Roku LLC, a maker of advanced digital media players.

``It's always been my opinion that DVR is sort of a stepping-stone technology, more of a feature than an actual product,'' he said. ``Really, the future is Internet delivered content _ not recording it and watching it later.''