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TiVo Opens New Doors with Sony

San Jose, Calif.-based TiVo Inc. says it is moving into a new phase of its business. The company Thursday trumpeted an expansion of its relationship with Sony Corp. that also signals a first step in its efforts to create a new revenue stream through licensing.

TiVo President and Chief Executive Officer Mike Ramsay said the company expects revenues from the seven-year deal to be in the range of $10 million to $15 million in the first 12 months. The deal should also expand service-based revenues by making TiVo's service much more widely available. TiVo currently has about a quarter million subscribers to its service. Sony will also pay royalties for each box manufactured. TiVo will receive additional revenues from software upgrades, services and fees.

"A key component of TiVo strategy going forward is to create and develop a licensing business that monetizes our growing technology portfolio to increase revenue, develop DVR standards, and to broaden our market opportunities," Ramsay said.

Sony, a major TiVo investor, already manufactures set-top boxes with digital video recording (DVR) technology based on TiVo's design, which Ramsay called a reference platform. Under the new deal, Sony will license that technology -- including patented hardware and software designs -- giving it the ability to develop its own designs and incorporate the technology in all sorts of consumer electronic devices.

"This particular agreement gives Sony access to a deeper and greater range of technology assets from TiVo for the purpose of taking that technology and developing their own unique designs that are Sony specific," Ramsay said.

The deal includes an upfront technology fee for access to TiVo's client source code, and Ramsay said Sony also has an option to license TiVo's server source code for additional fees.

TiVo's technology, service and brand will be incorporated into Sony products under the agreement, and Ramsay said initial deployment in Sony products could come as early as next year.

Ramsay noted that the licensing deals -- which he called a "corner stone" of TiVo's strategy going forward -- would not end with Sony.

"This is not a one off," he said. "This is the anchor point, if you will, of a real business going forward. We'd like you to think of this as the first of a series that will build up over time and become a significant piece of our business going forward."

Ramsay intimated that more licensing deals were on the horizon.