March 2, 2006 4:46 PM PST

TiVo struggles to broaden its horizons

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NEW YORK--TiVo is jumping on the parental control bandwagon.

On Thursday, the company, well-known for its digital video recorder, unveiled at a press conference here a service called KidZone, which allows parents to look for shows appropriate for their children and separate that content from other shows recorded for adults.

The KidZone announcement comes as TiVo is being forced to redefine itself in the face of tough competition from makers of generic digital video recorders that have developed products similar to TiVo's own. Makers of traditional cable set-top boxes, such as Scientific-Atlanta--now a part of Cisco Systems--and Motorola, also have added digital recording capabilities to their boxes. To make matters worse, TiVo has lost its largest distribution partner, DirecTV, a relationship that accounts for about two-thirds of TiVo's total 4 million subscribers.

TiVo's KidZone

"The company has an awful lot of challenges," said Mark Harding, senior digital media analyst for Maxim Group. "It's pretty clear that their strategy to go to market with their own box and service isn't working. They need to solidify a strategy and commit to it."

TiVo is trying to do just that. The KidZone service is just one of many new features the company has introduced recently to differentiate its product from the rest of the pack. It has also partnered with companies like Apple Computer and Sony to extend its service to mobile devices. In addition, the company has been kicking around new ideas for pricing. During the KidZone press event, CEO Tom Rogers confirmed that TiVo is considering offering its DVR box for free to customers who pay a higher monthly fee for the service.

"We are very much about offering customers choice," he said. "And we are also focused on differentiating TiVo from other DVRs."

As the DirecTV deal ends, TiVo is looking to new distribution channels--mainly cable operators. Last year, it announced a deal to embed its software into Comcast's DVRs. The technology to do this, which is still being developed, will be available by the end of 2006, Rogers said.

But some analysts on Wall Street still worry about TiVo's prospects. Some have even speculated that the company might consider selling itself.

"Going after the cable market is definitely a step in the right direction," said Murray Arenson, a senior equity analyst at Ferris Baker Watts. "But those relationships can be tricky, and it's hard to know to what extent Comcast will allow TiVo the freedom to differentiate itself."

One thing is clear: TiVo has developed high-quality software and a user interface that could be used in emerging technologies such as IPTV (Internet Protocol television), Rogers said. He says he believes that TiVo's technology could help organize and navigate programming that might some day be available on TV sets via the Internet. But the company will also face stiff competition in this area, especially from heavyweights such as Microsoft, which is already working on IPTV solutions.

"We think that when people really start using IPTV there will be a need for a solution that can organize everything on the TV," Rogers said. "That's something we already do well."

As for TiVo's biggest potential competitor in this market, Microsoft, Rogers didn't seem too worried.

"I've been underwhelmed in terms of the user interface that I've seen from Microsoft," he said.

See more CNET content tagged:
TiVo Inc., IP television, DVR, video recorder, digital video

4 comments

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From a TiVo fangirl
I hardly remember life without TiVo. And I really don't want to. It's unfortunate that its alliance with DirecTV worked out so poorly. I have one DirecTV receiver with TiVo, and one with their generic DVR. The generic is just rubbish. Not having kids, I have no need for the KidZone. I wonder what else TiVo is going to come up with to stay viable?
Posted by kim&4catz (15 comments )
Reply Link Flag
Give USERS what they want.
Dual Tuners. HD. VOD. Recording optimization across multiple recorders. TRANSFER of LIFETIME SERVICE to NEW BOXES.

I like my two series-2 tivos. I've grown tired of the obvious limitations. Give folks the features they've been asking for for YEARS and maybe it'll turn around.

Kidzone?? Are you kidding? Jeese.
Posted by woggs123 (22 comments )
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You've got to be kidding
"TRANSFER of LIFETIME SERVICE to NEW BOXES."

You're joking right? This would drastically cut long term profits. The only reason they would ever offer something like this is because they know people will want to upgrade, need to replace boxes, etc. And they very clearly spell out what you are getting when you pay for it. It's a way for you to save a little bit of money by paying for a lifetime service for ONE box upfront. It was never intended as a lifetime service arrangement for one household. If it had been they would have had to charge a lot more up front for it.

I think this is a good example of consumers wanting everything for free.

Dual tuners are great, but it requires doubling certain hardware components and increasing cost... but I think I would be willing to pay a little extra for it.

As far as HD is concerned.... I'm not sure if that's a good deal or not yet. It can eat disk space far faster than standard TV. Yes, I'd like the picture quality to improve.... but I'm not sure how much of my storage I'd be willing to trade for it to be honest. (As an example, if you estimate analog TV at 640x480 then that's 0.29Mp per frame (raw). The highest HD resolution goes up to 1920x1080 which is 1.98Mp per frame. Just taking the ratio as a rough estimate means my 100 recorder would now be a 15 hour recorder.)

VOD: Yes, it would be nice if Tivo coordinated with your cable box for video on demand programming and recorded it for you. Certainly not a trivial task. Since my cable company doesn't offer VOD, not something that matters much to me at the moment.

Recording optimization across multiple recorders... I only have one tivo box so not a big deal for me. It would be interesting to know what percentage of their market would really be interested in this. Even if I had two boxes I don't think this would be a very big deal for me. Maybe if I had 3 or more... but the percentage of users in that situation has to be pretty small.

My 2 cents...
Posted by drfrost (467 comments )
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