In a deal seen as a potential big boost to TiVo's presence while quelling big doubts about its future, TiVo has a new contract to supply digital video recording technology to the number one cable television operator in the United States, Comcast.
Estimated as being between a $10-30 million deal over seven years, the deal calls for TiVo to license its recording technology to Comcast to use in current and coming set-top boxes and extend TiVo's advertising system to Comcast's system, according to several reports announcing the March 15 deal.
What's different about this deal is TiVo won't be building set-top boxes for Comcast, as it does under other, similar cable deals.
TiVo, for its part, is reveling in the surprise many experienced when the deal was announced. "I sensed that people did not believe that we would be able to get a comprehensive deal with the largest cable company in the country," vice chairman Tom Rogers told reporters. "What the rest of the world didn't think we could accomplish, we did."
TiVo recorders save television programs and cablecast films to built-in hard drives, letting viewers pause live television, bypass advertising spots, and record dozens of hours worth of programming, with subscribers paying up to $13 per month.
Comcast and TiVo plan to offer a version of the TiVo service to Comcast subscribers in mid-to-late 2006, selling it as an alternative to Comcast's current $10-per-month DVR service. What Comcast will charge for TiVo system service wasn't yet disclosed, but the cable operator will pay upfront and engineering fees and pay TiVo based on the number of Comcast customers who sign up for monthly TiVo, according to disclosed terms of the new deal.
And whether TiVo has other such cable deals coming is anybody's guess. "It's hard to fathom why other cable operators won't follow Comcast's lead," said Vintage Research analyst William Kidd in a clients' note distributed online, "given that TiVo is no longer competing to provide hardware."
son Square Research said it thinks the Comcast deal lends TiVo leverage in negotiations with such other players as Wal-Mart, which have yet to sell TiVo devices.
