Comcast threw a life preserver to struggling TiVo yesterday, agreeing to pay the pioneer of digital video recorders to develop a service...
PHILADELPHIA — Comcast threw a life preserver to struggling TiVo yesterday, agreeing to pay the pioneer of digital video recorders to develop a service for Comcast’s 21.5 million cable-TV customers.
The agreement will bring TiVo innovations to Comcast’s digital video recorders, or DVRs, including software that can anticipate what a viewer wants to see.
But the TiVo technology will come only as a premium service, Comcast said, at a yet-to-be-determined fee on top of the regular monthly cable bill.
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“Comcast will find it a lot easier to sell TiVo than to sell its own generic recording service, and that is what this is all about,” said Josh Bernoff, a cable-industry analyst at Forrester Research in Cambridge, Mass.
“When customers say your DVR isn’t as good as TiVo, they can say, ‘We have TiVo.’ “
The value of the deal was not disclosed, but access to such a large market for TiVo heartened investors who drove the company’s shares up $2.87, nearly 75 percent, to $6.70 yesterday. Comcast’s shares were down 8 cents at $33.91.
TiVo has been struggling since last fall to maintain market share versus cable operators that have begun offering DVR technology.
That technology, along with video-on-demand, is helping change the way many people watch TV, letting them watch programs on their own schedule, rather than on schedules imposed by broadcasters.
Many TiVo users scoffed at the cable companies’ DVRs, complaining they lacked the functionality of a TiVo box.
But yesterday’s deal will bring many of those functions to Comcast’s DVRs in mid- to late 2006, Comcast said.
It will take that long for TiVo to develop the necessary software and make it work with Comcast’s networks, said Mark Hess, a Comcast senior vice president for technology development.
Among those services are “WishList” searches that will seek program listings for shows related to a specific topic, such as cooking or scuba diving. TiVo’s software can find all the shows that match that topic and record them for the viewer to watch at any time.
The system also can make program recommendations to customers based on the shows they elect to record, and it allows users to schedule recordings when they are away from home, via the Internet.
“There’s a lot we can learn” from TiVo, Hess said. “You think about it, they’ve been at this … longer than we have.”
DVRs — from TiVo and from cable and satellite companies — have been popular. They found a place in 6.5 million households last year, up from 1.9 million in 2002, according to Forrester Research. By 2009, Forrester predicted, the devices will be in 49.6 million homes.
TiVo, which has never reported a profit, was also said to be desperate to strike a deal with a major cable-TV company after its biggest distributor, satellite-TV provider DirecTV, announced last fall that it would start offering its own DVRs to subscribers.
“With limited options” for its product, “we feel that TiVo held its nose and signed a tough deal with Comcast,” cable-industry analyst Alan Bezoza of Friedman Billings Ramsey in New York wrote in a research note to clients yesterday.
In January, TiVo founder Mike Ramsay said he would step down as chief executive but remain chairman of the board. His decision closely followed his failure to reach a distribution agreement with Comcast, according to a report that month in The New York Times.
TiVo’s vice chairman, Thomas Rogers, told The Associated Press that the deal with Comcast would likely be the first in a series of pacts with cable-TV companies.
“I’ve done a lot of deals with the cable industry, and when you do a deal with the largest cable operator, it’s very helpful in opening up other doors in the industry,” said Rogers, former executive vice president for cable at NBC.
In Washington state, Comcast has more than 1 million cable-TV subscribers and more than 400,000 high-speed Internet subscribers.