With nearly every family in America having a TV in their living rooms, the
concept of interactive TV has always seemed like a no-brainer. Yet, despite
many efforts from mega media companies, nothing seems to work.
But in the past few years, interactive TV has been gaining traction. One of
the top providers is TiVo .
The concept for TiVo was hatched by Mike Ramsay and Jim Barton, both of whom
have a deep understanding of interactive TV; that is, they helped create a
joint venture for Time-Warner and SGI.
However, Ramsay and Barton quickly realized that they could do a much better
job on their own. TiVo was born.
The company has a set-top box that hooks into your TV. When watching TV,
you can pause, instant replay or do slow motion at any time. By clicking a
button, you can locate and record your favorite shows. The recording is
done in digital and there is no videotape required.
Other features include:
Now Playing: This lists on your TV screen the shows you have recorded. You
can click a show to watch it.
TiVo’s Suggestions: For any show, you can select Thumbs Up or Thumbs Down.
TiVo then recommends TV shows based on this information.
TiVolution Magazine: This is a daily guide that shows the latest specials,
movies and TV shows.
The TiVo box is hooked to your telephone system. So whenever there are new
services, your TiVo box will be updated.
Critical to the success of TiVo has been strategic partnerships. To this
end, the company has struck distribution deals with Philips Consumer
Electronics and SONY. In all, there are more than 4,000 retail outlets that
sell TiVos.
TiVo has also aligned with AOL and DIRECTTV, as well as major network
programmers, such as ABC, CBS, ESPN, NBC, HBO, Showtime and the Discovery
Channel. In fact, TiVo has been able to attract AOL, DIRECTTV, CBS, Philips
Electronics, and Showtime as investors.
The company is still in the early stages. In the past quarter, revenues
were $719,000, which was up from $8,000 in the same period a year ago (the
installed base is now 51,000). The sequential growth rate was 70%. Losses
were $29 million.
Interestingly enough, TiVo has been pursuing international markets. For
example, the company recently signed an agreement with Thomson Multimedia to
sell TiVo boxes in the U.K.
Yet, TiVo’s critical deal was with AOL. The term is three years and TiVo
will become an AOLTV programming partner. TiVo will develop a special
set-top boxes for AOL, in which TiVo will be the exclusive provider of
personal TV features. Also, AOL agreed to invest up to $200 million.
With its cutting-edge technologies and partnerships, TiVo is in a strong
position to realize the dream of interactive TV. Already, the company is
showing strong subscriber growth, which should continue for many years and
provide fuel for the stock price.
