Why TiVo and DirecTV fell out of love

It's no secret that in recent months there's been some, um, strain in TiVo's relationship with DirecTV, the satellite TV provider that accounts for TiVo's subscriber base, but why did this once happy partnership go south? Phillip Swann thinks it has a lot to do with Rubert Murdoch, DirecTV's mack daddy, and his failure to buy a controlling interest in TiVo back in late 2003/early 2004. Why did TiVo resist closer integration with the company they so closely relied on for customers? Swann says it's because they were concerned that striking a deal with DirecTV (and its 14 million subscribers) would prevent them from ever being able to work with any of the cable companies (which have access to nearly 70 million homes). In highsight it was probably the right move on their part given their recent deal with Comcast, but TiVo saying no to Rupert did result in a series of events that put the company on shaky financial ground, events which culminated in January with DirecTV's announcement at CES that they're were going to offer their own in-house digital video recorder to their customers that would cost less than TiVo's offering. That move has left of people guessing that DirecTV isn't going to renew their current marketing arrangement with TiVo when it expires, which means that TiVo better have cut a sweet enough deal with Comcast to make up for any projected loss of revenue.

[Via Slashdot]

[Pacey @ Dec 19th 2005 12:12AM]

I'm actually looking forward to this deal with comcast and TiVo. We have great service in the Detroit area. On Demand is getting better. Thrown in HD capability and I'm sold.

Now if they would just unlock the serial port on the back of the box now so I could plug in my series 2...

[bill @ Dec 19th 2005 12:12AM]

So, will my $1000 hi-def TiVo continue to work when/if they split??

[Sky de Luce @ Dec 19th 2005 12:12AM]

It won't happen. They won't split. DirecTV would be cutting their own throaght to throw away a key product like TIVO, only to lose customers who want a REAL DVR, to Comcast. Many other TIVO partnerships are in the works, due both to the "blessing" of Comcast (the giant of the cable industry) as well as due to TIVO's large patent base.

DirecTV's acquisition of NDS (the supposed supplier of their new PVR) was at best wishful thinking and at worst a bluff to get TIVO to make a deal on Rupert's terms. Rupert lost that one (poor Rupert) and now he'll have to suck it up and do a deal on TIVO's terms or look the fool.

There will soon be both legitimate products using TivoToGo's technology (for viewing your pre-recorded programing on portable devices) as well as unlicensed hacks (can you say PSP?) Tivo's always been HACKER friendly (e.g. early ethernet support left in, 30 second skip left in, etc.)

Today investors started accumulating TIVO shares in anticipation of an announcement of a new CEO. (following the announcement of the new head of HR.) TIVO's future looks very very bright.

[dave carpe @ Dec 19th 2005 12:12AM]

business issues aside, i genuinely believe with the brilliant arthur van hoff involved in tivo (via strangeberry acquisition), something great is going to come...hopefully it won't be too late for them, though i suspect that whatever they're dreaming up will operated independent of the devices/partners (perhaps...)

[David Allardice @ Dec 19th 2005 12:12AM]

US readers would do well to remember what happened in the UK. TiVo launched in the UK with the support of Sky (Rupert Murdoch's satellite company in the UK, an equivalent of DirectTV). Sky handled the marketing, support, promotion, for TiVo UK. After a year, Sky launched their own NDS-based box, Sky+. TiVo was dead in the water. Sky threw millions of pounds of marketing at Sky+ and nothing at TiVo, who couldn't compete on their own because they were tied into the Sky marketing deal.

TiVo eventually lost their manufacturing partner in the UK and it's not possible to buy a new TiVo in the UK, although the service continues (and long may it). Sky+ has many more times the subscribers than TiVo and has become the generic name for a PVR in the UK.

As far as the Sky+ box goes, it has some benefits over TiVo in the UK as it records the original data stream and has dual tuners, which TiVo does not here. However, the Sky+ software is known to be unreliable and while for most people it's great (because it's so much better than using videotapes) it does't come close to the power and flexibility of TiVo.

Clearly the situation in the US (where TiVo is a household name) is different from that in the UK, but my message is: underestimate NDS, and Rupert Murdoch, at your peril.

[KillerRobot @ Dec 19th 2005 12:12AM]

"TiVo better have cut a sweet enough deal with Comcast to make up for any projected loss of revenue."

No. TiVo 'better be able to' cut dealS (plural) that make up for the lost projected revenue (semantical note: certainly not "projected loss of revenue"). Even if the Comcast deal is a bust, who knows what might be around the corner as a result of any potential freedom from DirecTV.

[Grandpa @ Dec 19th 2005 12:12AM]

#5: Tivo for DirecTV has 2 tuners that record the original data stream from satellite. And it costs less than $100.

Tivo's problem is that their design and UI are overrated. It's not a complicated task to begin with and their UI has its problems.

They need to keep on top of their innovation and market the hell out of it. High subscription fees were a short sighted way to begin the company. And now advertising will make us flee.

Any product basing its business model on look and feel will eventually just have to compete with all the me-toos.