[opendtv] Search giants court TiVo
- From: Craig Birkmaier <craig@xxxxxxxxx>
- To: OpenDTV Mail List <opendtv@xxxxxxxxxxxxx>
- Date: Wed, 20 Apr 2005 11:34:46 -0400
Search giants court TiVo
By Stefanie Olsen
http://news.com.com/Search+giants+court+TiVo/2100-1041_3-5673225.html
Story last modified Mon Apr 18 04:00:00 PDT 2005
TiVo is in talks with Internet search giants Google and Yahoo over a
possible deal aimed at bridging television and the Web, CNET News.com
has learned.
The talks are still fluid and could result in a number of outcomes,
two sources familiar with the negotiations said.
One scenario that's been discussed would see TiVo partner with Google
or Yahoo on a new service that would let consumers search for videos
on the Web and then watch them on their television sets, according to
one person with knowledge of the talks, who spoke on condition of
anonymity.
A second person familiar with the talks said TiVo has held talks with
both Google and Yahoo about a potential equity investment, including
the possibility of an outright acquisition. Any deal would likely be
exclusive, this source said, Nothing has been finalized, however, and
the talks could yet fall apart.
"A deal to cooperate could happen quickly, but then the details would
have to be worked out," the first source said. "The search companies
need to work with companies like TiVo because they have access to the
living room, and they own a television interface."
A TiVo representative declined to comment for this report. Jennifer
Feikin, director of Google Video, said she could not comment on any
TiVo talks at this time. Yahoo spokeswoman Kathryn Kelly said the
company does not comment on rumors and speculation.
A partnership between TiVo and a major Internet search engine would
offer expansion opportunities for both. TiVo has long talked about
becoming the "Google of TV," eventually enabling its 3 million
subscribers to search for and watch any broadcast or broadband media.
Though TiVo opened the door for video downloads straight from the
Web, it does not yet offer such a feature.
Meanwhile, Google and Yahoo are investing heavily in video services.
Google this week began soliciting video submissions to its searchable
broadcast archives, inviting small and major producers alike to host
or sell playback of their work using its servers. The project builds
on Google Video, the company's latest experimental work to archive
closed captioning of broadcast television shows and make their
content searchable. The beta project launched earlier this year, but
it has yet to allow people to watch video clips.
Yahoo this year also launched a searchable video archive.
Both search giants have for now focused on PCs and the Web, but
ultimately, industry observers believe, their plans will involve
porting Web video clips to the television, which generally offers
viewers a better video experience.
Google and Yahoo are in such fierce competition that neither wants to
let the other land a deal with TiVo that might provide an edge. That
could strengthen TiVo's hand at the negotiating table, one source
said.
Though details have yet to be worked out, a number of possibilities
have been put on the table, sources familiar with the talks said.
For example, a TiVo deal might allow Google or Yahoo users to find
video files on the Web and then watch them on their televisions. Web
surfers might provide some personal information, including their TiVo
serial box number, in order to download video directly to their TiVo
box. A credit card number might also be required, if the video had an
associated fee. TiVo would collect a share of the fees from either
customer payment or from advertising-supported video.
Such a Yahoo or Google deal would be attractive to TiVo because it
would promote TiVo's service among a broad audience, potentially
selling more set-top boxes that are broadband-enabled. Right now, the
company has an estimated 300,000 customers using its
broadband-connected boxes, versus close to 3 million using a dialup
connection that wouldn't allow for a Web to television service.
"A big user interface extension"
Mike Homer, a former TiVo board member who still serves as a
consultant for the company, said he did not have specific knowledge
of a pending deal with Google or Yahoo. Nevertheless, he said a
collaboration between TiVo and a Web search engine in that class
would be a win for both.
"You can think of this as a big user interface extension," he said.
"It makes a lot of sense, and you could almost claim that it is
totally necessary...it's a no-brainer."
To be sure, there will be many issues to iron out before
successfully transferring Web video to the television. TiVo will
likely have to expand its storage capabilities. The quality of Web
video must improve for television viewing. And bandwidth capabilities
in homes must expand, among other considerations.
More problematic, however, are copyright issues that need to be
ironed out with broadcasters and content producers, as well as the
inevitable pushback from television networks and cable companies.
Cable companies, for example, are reluctant to abandon control of
their distribution channel to consumers by allowing in millions of
new feeds of content.
Any new Web-based video service TiVo develops will also face some
stiff competition. Companies such as Akimbo, Brightcove.com and
iFilm.com want to help give independent videos new distribution onto
the television. Akimbo, whose set-top box lets people watch thousands
of shows from the Internet on their television set, hopes to
eventually partner with cable companies or set-top-box manufacturers
to plug in its service similar to that of TiVo's. The difference in
the two strategies is that TiVo does not want to license or own the
content it distributes, at least for now. And Akimbo has yet to
develop a substantial subscriber base.
TiVo has long been seen as a takeover candidate, given its relatively
small size, lack of profits and its ambitions to challenge television
and cable industry giants. Among its chief attractions is its brand,
which is to DVRs, or digital video recorders, what Xerox is to
copiers. Apple Computer, Sony and Comcast have all been mentioned as
potential suitors, although no offers for the company have been
confirmed.
TiVo's courting of Internet search engines comes as the company's
fortunes are reviving, thanks to a recent deal with cable giant
Comcast that would see the DVR-maker co-develop a version of its
video recording service that Comcast would offer as an option to its
21.5 million cable subscribers.
Setting itself apart
The Google alliance would be the latest in TiVo's efforts to create
new services to differentiate itself from a crowding DVR market.
TiVo has been developing what it calls its Tahiti strategy for nearly
two years. Services being developed as part of the strategy aim to
make Internet content available to TiVo DVR subscribers on their
television. Initial efforts include: making movies and trailers
downloadable to a TiVo recorder from an Internet-connected PC; buying
products through the TiVo interface; and searching local movie
theater listings.
Synergies between the Web search giants and TiVo could include
transferring the multibillion-dollar pay-for-performance advertising
model from the Web to television. Last year, TiVo's president said
the company was developing a technology infrastructure that would
enable content owners to pay for exposure in search results for
video. Google and Yahoo both specialize in the same business, but for
the Web.
TiVo has also made content on its recorders available on PCs through
its TiVoToGo service.
TiVo has become especially aggressive recently in efforts to develop
new services as competition has increased in the DVR market. New
Tahiti services are expected to become available throughout the year,
Chief Executive Mike Ramsay said earlier this year at the Consumer
Electronics Show in Las Vegas.
The CEO's visions for such efforts are so ambitious that he expects
the model where Internet-related content is played on televisions to
challenge the broadcast television industry in the next 10 years.
The DVR pioneer has to have such grand visions for its service,
otherwise it risks being lost in the woods as other companies try to
pick off customers. The biggest threat to its business involves
TiVo's largest customer, DirecTV.
The satellite service operator accounts for more than half of TiVo's
subscribers. DirecTV said it would use software developer NDS as a
second supplier for DVR technology. DirecTV has not turned on
features beyond TiVo's core DVR service, such as Home Media features,
to the chagrin of DirecTV TiVo subscribers.
In addition, a DVR feature is at the heart of Microsoft's Windows XP
Media Center Edition, and satellite service company EchoStar
Communications also features a DVR in its set-top boxes.
Comcast also launched a DVR feature for its cable service, which was
a blow to TiVo's efforts to woo the leading cable company in the
United States. However, in a coup, TiVo managed to ink a distribution
deal that will kick in with the first of their co-developed products
in mid- to late-2006 and will use the TiVo brand.
Despite the addition of Comcast as a partner, TiVo has been
developing new features and advertising methods to again set itself
apart from the television industry.
"There are those out there who think that DVR is the endgame," Ramsay
said at CES earlier this year. "DVR is not the endgame, it's just the
beginning."
Copyright ©1995-2005 CNET Networks, Inc. All rights reserved.
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