PHILADELPHIA – Comcast Corp. is installing a new cable box with the potential to change the way people watch TV.
More revolutionary than HDTV, more empowering than 500 channels, the new boxes let viewers watch what they want to watch, when they want to watch it.
It lets them pause and rewind live shows. Even technophobes whose VCRs have always flashed 12:00 … 12:00 … 12:00 can use one of the new boxes to record their favorite TV shows, even if two are on at the same time.
Does all this sound a lot like a product called TiVo? Well, it is a lot like TiVo.
Is TiVo toast?
And now some Wall Street observers are wondering if the arrival of these new digital video recorders, or DVRs, means that TiVo is toast – or at least destined to a niche role along the lines of Apple’s Macintosh computer.
“TiVo has branded this idea, but … that doesn’t mean they get to win,” said Josh Bernoff, an analyst at market research firm Forrester Research in Cambridge, Mass.
In the world of DVRs, Bernoff said, “2004 was the year of TiVo,” but “2005 will be the year of the cable DVR.”
The folks at TiVo, of course, see a brighter side. The company said it is remaking itself as a provider of units empowered with cutting-edge technology.
“If at the end of the day TiVo is … appealing to only, say, 50 million households, I’ll take that business,” said Matt Wisk, TiVo’s senior vice president and chief marketing officer. “That’s a nice chunk of change.”
Comcast is not the only cable company distributing DVRs, which, like TiVo’s boxes, are about the size of a DVD player. Satellite-TV providers offer them, too – many of them made by TiVo.
Some consumer electronics companies, including Sony and Pioneer, also sell the units – with technology licensed from TiVo – directly to consumers for about $100 and up.
By the end of 2004, Forrester estimated, there were TiVos and other DVRs in 6.5 million U.S. households, up from 3.5 million the year before.
Forrester estimated the number will climb to 11 million by the end of this year and to nearly 50 million – 41 percent of U.S. households – in 2009.
How DVRs work
DVRs perform their magic with two key technologies.
First, they record whatever is being watched onto a hard drive, just like the one inside your home computer.
That’s what makes possible their gee-whizziest feature: the ability to pause and rewind a show while it is being broadcast. So you can replay that juggling catch or goal-line stand yourself, then catch up with the game when you’re ready to move on.
Second, they rely on an electronic program guide downloaded by telephone line (in TiVo’s case) or from your cable or satellite company (with company-supplied DVRs). This provides an on-screen menu that makes it easy to record the shows you want to save.
With the guide, a user can search for shows alphabetically, by time or by program type (movies, sports, news).
Satellite-TV provider DirecTV has offered a TiVo box in a package deal to subscribers for several years. But in November, DirectTV, TiVo’s biggest distributor, entered into a partnership with NDS Group to develop its own DVR.
Both DirecTV and NDS are controlled by Rupert Murdoch’s News Corp.
On Jan. 12, TiVo chief executive officer and cofounder Mike Ramsay announced that he would step down as soon as a successor can be named.
In mid-January it was reported that his decision followed TiVo board unhappiness over failed talks to set up a DVR partnership with Comcast.
A Comcast official confirmed that the talks occurred but declined to characterize them.
TiVo’s Wisk said that while partnerships with cable systems would be “icing on the cake … we can’t build our entire business around the potential of having those partnerships.”
Instead, TiVo will focus on taking “the whole notion of personalization” farther and on doing things the cable companies’ DVRs don’t yet offer.
One such feature already in place is TiVo’s ability to recommend shows users might like, based on other shows they’ve selected.
Plus, there’s “TiVoToGo,” a technology that lets users move recorded shows into a laptop or desktop computer via a home network and record those shows to a DVD for viewing elsewhere.
The cable systems’ generic DVRs, many of which were engineered by Motorola’s Connected Home Solutions Unit in Horsham, Pa., will eventually offer such technologies, too.
TiVo will have to “deliver ahead of the competition,” Wisk said.
Bernoff said, “The people who use this product are the happiest we’ve ever seen. Nineteen percent used the word love.”
The average DVR user recommends a DVR to seven other people and persuades two of those folks to get one, he said. “This is unprecedented.”
Yet the product remains a mystery to most people who don’t have one.
“People who don’t understand it “really don’t understand it,” Bernoff said. “We asked, “do you know what a DVR is?’ Eighty percent said “no.”‘
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