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Summary:

Okay before you start laughing, read this thoughtful piece over on Democracy in Media. Alex explains that there was a big power struggle inside TiVo with outgoing CEO Mike Ramsay in one camp pushing for more independent, Internet centric strategy that depended on monthly fees and […]

Okay before you start laughing, read this thoughtful piece over on Democracy in Media. Alex explains that there was a big power struggle inside TiVo with outgoing CEO Mike Ramsay in one camp pushing for more independent, Internet centric strategy that depended on monthly fees and constant innovation. The other camp wanted to drive growth through carriers and cable providers. Well, seems like the second camp has won! And its not such a good strategy. DirecTV pays a mere $1 per subscription to TiVo for the licensing the technology and if company got the same deal from Comcast, well the total revenues won’t really add-up to much. In other words, Alex argues that TiVo strategy is too muddled. You can read the full analysis.

By Om Malik

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  1. I disagree. I think this is a good short-term move for TiVo provided that they don’t lose sight of their internet based service expansion, potential partnership with NetFlix, and other general innovation. Having their logo in Comcast homes keeps their market-share up and general awareness of TiVo out there. Once they release CableCard enabled boxes, they will have TiVo customers for life, regardless of what the cable companies choose to do. This gives Comcast customers a taste of the superior TiVo user interface and nothing else will taste the same after.

    My two cents.

    -m

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  2. Om,

    Nice work. Thanks for pointing us to this interesting perspective on the situation. Following is the comment that I left over at Democracy in Media.

    At present the advertising revenue and what not represent less than 10% but with a significantly larger install base that Comcast could represent the advertising and other services revenue will most likely become more significant.

    Lots of unanswered questions. How will NetFlix fit into the picture? Will the TiVo Comcast box really have any teeth or will it just be a dumbed down TiVo like the dumbded down version of Microsoft’s Media Center that Comcast in now testing in Washington — the Foundation box?

    And how crazy was it that Ramsay was villifying the cable companies as a “monopoly” on the analyst call just last week when asked about the CableCARD issue? I have to assume that at the same time they were negotiating with Comcast. What a strange tact to take unless it was to purposely throw people off or here’s a really wild scenario, unless Ramsay never even knew about the deal. What if there were other decision makers at TiVo that in order to stave off the declining stock price made the deal without Ramsay knowing.

    If what the New York Times printed previously about a Comcast deal falling apart when Ramsay wanted more money and more control over the box, could Ramsay really have been totally out of the loop and this happened behind his back.

    Total and complete conjecture and conspiracy analysis, absolutely unfounded in any way, but how crazy would that have been?

    And what’s with the announced award of 250,000 options at the low stock price to Ramsay only a few days prior to the big Comcast announcement?

    What’s the chance that some anonymous individual could leak the real story on some comment board (like this) somewhere?

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  3. Hey Michael. There is always the potential that TiVo can focus on two different constituencies and make both happy enough to continue using the service. It just doesn’t happen very often, and frankly TiVo hasn’t shown any specific aptitude for it.

    I think you’re right that they need to stay focused on Internet video, deals like Netflix, and other innovations, but I’m also saying that will be very difficult with Comcast driving TiVos engineering priorities. (Netflix, for example. Why would Comcast open up their network to a competitor? Not through the ComcasTiVoMoto box.)

    As to Tom’s comments… I’ll just repost from my e-mail to him re: Ramsay…

    As for the Ramsay debacle, I’m not sure what the hell was going on there. I have a VERY hard time believing that Ramsay had no clue about the
    Comcast deal when that call went down. I believe that was just Ramsay
    speaking his mind. I think he’s not happy about this entire situation and
    will take the pot shots when he can. CableCARD is his last hope of really
    bringing TiVo back towards his original vision. I think he’s going to
    fight like hell to keep the cablecos honest on this one.

    As for the options, I would see this as a board feeling guilty about
    essentially taking a founder’s company in a direction that he plainly
    wasn’t happy about. This is “sleep well at night money,â€? not for Ramsay,
    but for the board.

    thanks for the attention, Om.

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  4. Folks – you all make some exceptional points. I have to add a few things here. First of all, a lot of it is conjecture and we need to be very careful. I am with Alex on this one for one simple – a TiVo lite for Comcast is good for now, but what happens when Motorola finally manages to bring a better product to market. that one billion $ deal tells me something bigger is cooking. lastly, don’t pay much attention to the whole cable card stuff. it has many problems.

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  5. Om, another way to look at this is an offshoot of our discussion about TIVO-PC.
    I think cable relationships are so much better for PVR’s than Dish in that cable providers can integrate the Internet and take web-functions from early adapter status to mainstream. My local cable company is already giving away free wifi setup with Internet, and offering discount bundles of Internet with cable-tv. I just see a great bundle of cable-tv, cable-Internet and network-enabled PVR.
    Implementation excellence is key (look at ipod vs the rest of the field). TIVO is the PVR usability expert – who better to mainstream the networked PVR function. This may be a low margin deal for TIVO but I think it’s worth it; the cable monopoly is indeed coming to TIVO.

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  6. “TiVo lite” I like it.

    Yes you are right Om. Something is better than nothing and as much as I hate to admit it, having a dual tuner, HDTV capable unit with adequate storage is really 90% of the equation. Advanced networking a la TiVo to Go, Home Media option, etc. are nice and would be ideal in a perfect world.

    As much as I hate the fact that DirecTV has dumbed down my current quad tuner HDTV DirecTV TiVo, I still use it far more than my non-HDTV single tuner MCE machine despite the MCE’s much superior home media and networking capabilities.

    I’d just like to see someone finally build the “perfect” box.

    Alex, you are right on with the integration of micro content COMBINED with a cable/satellite box. People need more than Akimbo. People need to be weaned off of cable and satellite and on to new internet content as you suggested in your email to me.

    We should also think about the best niche content though to make them make the jump to buy this new multipurpose box.

    My own thoughts are that initially this could focus on amateur athletics (little league, high school sports, etc.), local government and community stuff (planning meetings, school plays, etc.), religious programming (large congregational service broadcasts) and youth oriented indie type stuff (well made but still home made skate punk type stuff or the like) and easily produced reality television.

    If my grandson plays little league in San Diego and I live in Buffalo New York, this might be just the thing to get me to buy a combined satellite/cable/microcontent box.

    Someone will need to produce a guide and hire a team of editors to review, catalog, organize and rank this new internet content.

    The perfect box should have quad tuners (2 analog 2 HD), have expandable storage, have full networking capabilities, have a sophisticated home media option, have a released SDK to encourage outside plug ins and development, AND have a sophisticated and proprietary microcontent platform.

    The more sophisticated HME option will do things like aggregate content from copyright free places like the internet archive and display it in an easy to navigate on screen fashion.

    If I can get Jack Johnson concerts on the Internet Archive, someone should build a plug in to have Jack Johnson’s Internet Archive posted concerts come up under “my music” in the HME option automatically. Ideally (although perhaps to the chagrin of free media advocates due to the excess bandwidth issues – and we might need to find a better way to compensate folks like the Internet Archive for our bandwidth hogging) smart HME software should scrape and collect content from any site that I enter into it. I should be able to provide http:// locations and then have the smart software go out and pull all .mp3 files from a site, all photographs from a photobloging site, etc. (feel free to take my photographs from Thomashawk.com at any time). This would all be for personal home use of course.

    This content would then be aggregated into my home media library for later consumption on my 43� plasma.

    Combine all of this fantastic microcontent stuff with the perfect completely networked quad tuner cable and satellite HDTV box with easily expandable storage and that dog will hunt!

    On the other hand, this is not what Comcast necessarily wants to see you do.

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  7. Jon, I agree that cable has the POTENTIAL to roll out some great service suites. I mean they have by far the fattest pipe into the house right now. The problem is that the more access they provide to content via the “open” Internet as opposed to their “closed” cable system, the faster they erode the value of the closed system; the more they just become a commodity delivery channel with minimal advantages over any other provider of broadband, be it DSL, wireless, etc. Cable wants to stay in control of distribution. Internet content delivery loosens this control considerably.

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  8. Alex, I think you are reading more into my comment then I intended. I’m just talking about Internet control of the PVR, not Internet CONTENT to the PVR. As Om mentioned in our previous “tivo-pc” discussion, mainstream users don’t go after functions like early-adopters. The cable companies can bridge that gap and would be motivated to sell more services. To the mainstream, always-on Internet and home networking is a “solution looking for a problem”. One problem could be ease of control of the cable provided PVR. And the cable company would be happy to sell a bundle TV content, PVR, always-on Internet and home networking.

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  9. To me, this looks like a classic Comcast hedge. They are building leverage between vendors and quasi-internal efforts that all touch PVR/ITV/VOD features and UI. There’s Microsoft (pilot in Seattle area), Guideworks (JV with Gemstar), and now the assets from the Liberate acquisitions. Looks to me that with a small outlay of cash for Liberate and nothing upfront to Tivo, Brian just improved his hand at the table with Bill.

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  10. On what basis are you calling this version of TiVo “TiVo lite”? I understand that TiVo 8-K says things like HMO and HME are available at Comcast’s request. However, the press release sepcifically mentions Season Passes, Wishlists, home networking, multimedia, and broadband capabilities. In addition, the New York times article says:

    It is also developing software that lets users move recorded programs to laptop computers or hand-held video players for later viewing.

    Stephen Burke, Comcast’s president, said that those extra features would appeal to some of the cable company’s customers.

    The negativity seems to be stemming from the assumption that there will only be a basic DVR offered, a la DirecTV. I concede that the language they’re using is tricky enough that it’s a possibility. However, the evidence suggests that ALL of TiVo’s features will be available. Again I ask – why the assumption that the offering will be “TiVo lite”?

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