I just read the Comcast press release to see exactly what sort of deal Tom Rogers negotiated for TiVo:
Under the terms of the agreement, Comcast and TiVo will work together to develop a version of the TiVo service that will be made available on Comcast’s current primary DVR platform. New software will be developed by TiVo and will be incorporated into Comcast’s existing network platforms. The new service will be marketed with the TiVo brand, and is expected to be available on Comcast’s DVR products in a majority of Comcast markets in mid-to-late 2006.
This long-term, non-exclusive partnership will provide millions of Comcast customers with the opportunity to choose the TiVo service, including TiVo’s award-winning user interface and features like Season Pass(TM) and WishList(TM), as an additional option. In addition, the service will showcase TiVo’s home networking, multimedia, and broadband capabilities.
My interpretation:
-
“a version of the TiVo service” = Comcast gets to pick and choose the features it wants to offer
-
“available on Comcast’s current primary DVR platform” = TiVo will have to make the software run on a Motorola or Scientific Atlanta DVR box
-
“New software will be developed by TiVo” = some elements of the TiVo interface
-
“long-term, non-exclusive partnership” = Comcast will use its deals with other suppliers (including Microsoft) to play hardball in negotiations, making it difficult for TiVo to make money on the service
-
“the opportunity to choose the TiVo service” = you’ll have to pay extra
TiVo is negotiating from a position of weakness, and it’s not likely they were able to squeeze out too many terms that are in their favor. The devil is in the details, of course, but this press release clearly positions TiVo as a “premium service.” Cable customers who choose the Comcast DVR are already paying for basic service. Can TiVo really be successful with a business model that depends on customers paying an extra monthly fee on top of an already-high cable bill? I suspect most people will choose to see whether they can tolerate the basic DVR service and will only pay for the upgrade if the experience is unbearable.
Update: The New York Times says TiVo service will indeed cost extra: “The new deal calls for TiVo to create software that can be downloaded and run on the Motorola video recording set-top boxes. It would be offered for a higher monthly fee than the generic Comcast version, which would still be available.”
And the Seattle P-I has a quote from Shari Glusker, a group product marketing manager in Microsoft’s TV division, who confirms that competition will be alive and well: “The partnership between TiVo and Comcast is not limiting to us in any way. While for both basic and ‘power user’ DVR functionality, TiVo and Foundation Edition are very close feature-to-feature, Foundation Edition is a much more comprehensive digital TV software solution that enables operators to give their customers simple and elegantly integrated control of advanced digital TV services like VOD, DVR, HDTV and Interactive Program Guides. That makes Foundation Edition a very compelling solution for the operator that wants to be competitive in the long run.”
Ed Bott 
Ed – I haven’t read you for too long, but you seem overly negative about this deal. Some counterpoints:
“Non-exclusive” also means that TiVo can sell its software to other cable companies. I don’t know which cable companies use the various Motorola/Scientific Atlanta boxes, but I would assume that developing software for these boxes automatically makes it salable to companies other than Comcast. This is a good thing.
You say: “Can TiVo really be successful with a business model that depends on customers paying an extra monthly fee on top of an already-high cable bill?” – Paying an extra monthly fee has worked tremendously well on the DirecTV platform. I believe that there are now over 1.5 million DirecTiVo users.
You say: “Comcast gets to pick and choose the features it wants to offer” – The press release specifically states that Season Passes, WishLists, home networking, multimedia, and broadband capabilities are included. The description doesn’t specifically address TiVo’s Home Media Engine or Home Media Option, but the text almost certainly indicates support for HMO if not both.
If you read my earlier post on Tom Rogers, you’ll see why I’m skeptical about this deal. The DirecTV example actually doesn’t map very well to this one. DirecTV didn’t have a basic DVR solution to offer as competition. If you want a DVR with DirecTV, you have to get TiVo. That explains the success of this offering. And it’s worth noting that DirecTV has effectively ended their relationship with TiVo by partnering with another software provider.
With DirecTV, TiVo had a real edge among early adopters. That edge has vanished, and they’re now competing in a much more crowded field. I’m willing to wait and see how this shakes out, but I am not at all convinced that this will save TiVo.
(And for the record, if my cable company would offer me the choice of a TiVo interface instead of the crappy SARA software, I’d pay up to $10 a month extra. Grudgingly, but I’d pay it.)
TiVo was definitely in a position of weakness. With folks like Engadget covering the TiVo death watch they needed some excitement to if nothing else buy them a little more time.
Personally I think the big question that is still out there is what will the advertising and other revenue part look like.
Although advertising, market research (i.e. ratings measurement etc.) and other ancillary business represents less than 10% of TiVo’s revenue today, depending on what percentage of this business they might keep in the future vs. Comcast with a larger install base it could be more meaningful.
We probably really won’t know how badly / if TiVo got screwed until they begin reporting financial numbers. TiVo will still play their cards close to the vest but some analysts will most likely dissect the numbers, do the math and share with the rest of us how much they make per Comcast subscription as well as the ad and other revenue split.
Also, what about the NetFlix partnership? Are TiVo and the cable operators still at odds over the CableCARD issue? Seems like an odd relationship for TiVo to now benefit from the integration with the cable boxes while at the same time trying to develop a stand-alone box dependent on the CableCARD. Will they still be writing letters to the FCC and decrying the “cable monopoly” as Ramsay did on his conference call as recently as last week?
I mean isn’t it odd that obviously the Comcast deal was already in the works but on the earnings call Ramsay was using that kind of inflammatory language?
It would be great to be a fly on the wall in those negotiations.
I would imagine that the Comcast service will be a dumbed down TiVo experience similar to the DirecTV box without advanced network features, video on demand, etc. In a similar way to Foundation being a more limited watered down type of MCE like service — but I could be wrong, I often am.
Time will tell.
Just another MICROhawker trying to throw cold water on a tremendous partnership. The thing that you guys don’t understand is that Tivo is easy and reliable. You shouldn’t have to reboot your tv. Consumers want computers in their living rooms, they just don’t want to know it’s a computer. Why do you think that AOL still has 20 million customers? It’s because people are stupid and prefer usability over firepower. Tivo has always led the industry. They were the first ones to have the dvr, the first to offer HDTV and the first to offer home networking. They will continue to develop great innovations. If Microsoft was serious about muscling in on Tivo’s legacy, then they should attach their PVR to the XBOX. XBOX hardware sales are a money sucking pit and you’d be better off including PVR and networking features with the box. I wonder if parents would mind spending as much on a “present” for little Jimmy if it came with Media Center attached. Of course knowing Tivo they would respond by partnering with SONY and produce an even better console. COMCAST ROCKS!
Gee, if you read this site regularly you’d know that I’ve owned a TiVo for nearly five years and love the interface. Loving the product doesn’t mean looking at the company through rose-tinted glasses.