RealTime IT News

AOL Comes to TiVo

Some of America Online's more-popular services are coming to a TiVo near you -- one of the newer units, anyways -- through a deal announced between the digital-video recorder (DVR) maker and the New York-based AOL Time Warner Inc. subsidiary.

Terms of the pact call for San Jose, Calif.-based TiVo to integrate AOL features like instant messaging (IM) and live chat into its new TiVo Series2 DVRs, which were introduced earlier this year. Also, both companies are working to provide AOL members who are also TiVo subscribers with the ability to schedule recordings on their TiVo from the AOL service.

The TiVo Series2 can do what the first line of boxes did -- store TV shows on a hard drive and "pause" broadcasts. The new series added more recording capability (up to 60 hours of recording time), and enabled entertainment services like digital music, digital photos and broadband video-on-demand. The boxes themselves are smaller, and the remote control is improved.

The 60-hour version of the TiVo Series2 went on sale last month exclusively through Best Buy retail locations and via www.bestbuy.com for $399.99. Installation is also available.

While the technology side of the AOL/TiVo deal is pretty straight forward, the financial side is anything but. AOL will pay TiVo an undisclosed development fee to put its applications on the TiVo Series2 box, of which AOL has already put up $4 million, according to a Securities and Exchange Commission (SEC) filing. AOL will also pay to TiVo a revenue share on subscription revenues received from AOL users on the TiVo platform, and has agreed to reimburse TiVo for certain operating costs related to the AOL application.

The four-year pact also contains an option for AOL to buy a non-exclusive license of TiVo's DVR technology, and a provision for AOL to fund certain research and development at TiVo.

At the same time, TiVo will return to AOL $48 million of a $200 million investment made in June 2000 because "the new product offering will not require the subsidy payments contemplated at the time of the original agreement," TiVo officials said in a statement. AOL in turn will return 1.6 million shares of TiVo preferred stock to the DVR concern.

A specific combination AOL/TiVo box was envisioned in June 2000, when both companies first announced their relationship and the initial investment. Those plans are now off, with today's deal.

In January 2001, AOL and TiVo expanded their relationship to include an enhanced multi-million dollar marketing and promotional campaign across various AOL Time Warner online, print and television media properties. The campaign focused on educating consumers about the TiVo personal television service.

Bob Woods is the managing editor of InstantMessagingPlanet.