TiVo on Deathwatch

TiVo's near death experience.

TiVo had a slow rise to prominence as a new breed of set-top box early in the new millennium. TiVo didn't invent Digital Video Recorder technology, but they brought the technology out of the realm of hi-tech curiosity and made it easy to use for the masses. By mid-2003 it was such a well-established brand the very word TiVo became a verb, meaning to use the technology of a PVR (personal video recorder). TiVo became synonymous with the personal video recorder.

It hasn't exactly been a rosy path for TiVo. Despite the company's successes it was never a moneymaker – only announcing its first break-even quarter in August 2005 – and the company spent hundreds of millions by mid '04.

TiVo based their brand around a single good idea. This granted it a short-lived dominance in a market that was about to become big. Names like Sony, Motorola, Echo-Star and others built their own PVRs to compete with TiVo. Other full-featured PVR services also joined the fray, like ReplayTV. Each consumer electronic offering with a PVR had its own great idea attached.

Sony created PVRs for HDTVs that were also over-the-air HD tuners with no monthly fee. Since most HDTVs are only HD-ready and don't actually have built-in tuners, this is still a popular option. Cable and satellite providers released set-top boxes with built-in PVR capabilities too, making them the no-brainer choice for their customers. TiVo played this field with DirecTiVo. DirecTV offered certain models of their receivers with TiVo capabilities. This quickly became TiVo's bread and butter, its top source for new customers.

Things started really looking bad for TiVo at the start of '05. In January, DirecTV announced plans to create their own video recorder. TiVo, it seemed, was on the ropes. Stock plummeted and execs that had built TiVo began to resign. By February '05 its stock was down to just above $3.00, the lowest in over a year. Engadget put TiVo on their deathwatch list as TiVo looked like they'd be down and out in a matter of months.

Things started looking up for TiVo with a contract to provide TiVo functions to Comcast digital cable boxes in March '05. TiVo announced its first-ever break-even quarter in August '05. Then, in November '05, Yahoo and TiVo announced their collaboration to put web content onto the TiVo set-top box. The Yahoo deal will give users news, weather and sports information all at the push of the remote control.

Speculators have suggested this could be a move for Yahoo to gain a permanent foothold into the living room. The suggestion is that if TiVo is a doomed company it might be laid to rest at the hands of a buyout bid from Yahoo. Yahoo could be looking toward the future of digital home entertainment and competition with MSN and iTunes. Microsoft's Xbox Live Marketplace offered on their new Xbox 360 could be a gateway to an MSN shopping experience by remote control. It's likely that soon music downloads, TV shows and eventually movies will be purchased through Microsoft's marketplace. A set-top box that offers Yahoo's brand of e-commerce at the push of a remote control could have unprecedented penetration and will give Microsoft and Apple a run for their money.

Although TiVo seems to have survived major turbulence in 2005, the future is still uncertain. It could soon be property of Yahoo, providing PVR set-top boxes that can sell Yahoo Shopping.