Is TiVo's Comeback the Real Deal?
TiVo, the DVR pioneer, is announcing on Tuesday that it is bringing a wide selection of music to users of its increasingly versatile TV set-top boxes. Users whose TiVo boxes are connected to the Internet can now sign up for RealNetworks' Rhapsody music service …
Context & Ripple Effects
TiVo has spent two years rebuilding itself around partnerships rather than hardware alone: Yahoo's 2005 plan to connect its services with TiVo was the early template, and this year brought Amazon's Unbox movie downloads to the box. The company also posted its first profitable quarter in June 2007 — $835k, two years after the deathwatch began — giving the comeback narrative some numbers behind it.
The Rhapsody deal extends that playbook to music, and it pairs TiVo with a partner under pressure of its own: RealNetworks CEO Rob Glaser made waves at the D conference in May with a new Rip/Save/Burn 'All' product, so both companies need new distribution surfaces.
First-order effects
- Rhapsody subscribers with internet-connected TiVo boxes get subscription music on the TV starting Tuesday, making RealNetworks one of the few services with a genuine living-room footprint beyond the PC.
- For TiVo, the deal deepens the pivot from DVR recorder to broadband entertainment hub that began with Yahoo and Amazon — directly supporting the profitability story it started telling investors in June 2007.
Second-order effects
- Cable and satellite operators who license or compete with TiVo now face boxes that carry third-party subscriptions they don't control, raising the question of who owns the customer relationship in the living room.
- Other subscription media services face pressure to strike similar set-top deals, because a service absent from the TV risks being confined to the desk.
Third-order effects
- If the partner-by-partner approach holds, the DVR category repositions from time-shifting hardware to a general-purpose gateway for web-delivered entertainment — a shift that would make TiVo's software platform, and the open-source licensing questions it flagged around GPLv3 in June, strategically central rather than incidental.
- The persistent cost gap between falling HDTV prices and expensive HD TiVo units remains the constraint on how fast any of this reaches mainstream households.
The trend: Set-top boxes are evolving from single-purpose DVRs into broadband service hubs, with TiVo assembling third-party partners — Yahoo, Amazon, now RealNetworks — to prove the model.