Internet Outsider

TiVo Provides the Missing Movie-Download Link; Threatens Cable Cos

At long last, someone has finally addressed the gaping hole in the digital-movie-downloading business. TiVo's new deal to let subscribers rent or buy Amazon.com digital movies directly from their TiVo boxes removes an awkward step in the process: customers no longer have to futz with their computers to rent or purchase a movie. Now, they can just pick up the TiVo remote.

Perhaps this will finally light a fire under the cable companies, whose resistance to unforced innovation is legendary--and whose grasp on the digital rental market continues to slip. Or perhaps it won't...

Cable giants like Time Warner Cable, Cablevision and Comcast have been trying for years to boost revenue with on-demand movie rentals. But success has been hindered by limited movie selection, short viewing windows, and the inability to for viewers to purchase downloaded movies outright.

Meanwhile, online movie services like Amazon's Unbox or Apple's iTunes have required a computer to make the transaction and download the movie file. Getting the movies to play on TV has been even more complicated and expensive, requiring either a complex computer setup or a pricey gadget like Apple TV. TiVo's deal with Amazon solves some of these problems, allowing subscribers to buy movies without leaving the couch, or rent them for 30 days, often for less money than 24-hour cable rentals.

But don't short cable yet: TiVo's impact is limited by its modest presence -- only 4.3 million total subscribers, of which only a small percentage have set-top boxes compatible with the new service. Also cheap, no-brand DVRs built into cable boxes have already reduced TiVo's market share, and now that TiVo has blazed the trail, the cable companies are presumably free to strike similar deals of their own. Because digital-download services require a high-speed Internet connection, moreover, even the TiVo box is not a total loss for the cable companies.

In any case, expect more deals like this in the near future from companies like Apple, Microsoft and Sony, all of which are eager for a place in your living room -- at your cable company's expense.

TIVO: Cable Operators To Screw Us With SDV

Jason Jones: Tivo and the CableCard consortium face a threat from Switched Digital Video (SDV) offered by cable operators, according to MultiChannel News. SDV sends individual channel streams to viewers upon request rather than broadcasting channels to all users.  This requires two-way communication and is theoretically more efficient.  The industry has recently agreed upon the TiVo-friendly CableCard standard, which is a one-way technology and cannot support SDV--but the cable operators seem intent on going ahead with SDV.

All cable operators are required to begin distributing CableCard-ready set top boxes beginning July 1.  These boxes will have a slot available to insert a CableCard, which will enable channel selection and scrambling technology.  The consortium is intended to promote the compatibility of alternative set-top boxes, making consumer options more widespread.  TIVO has embraced the CableCard concept and has already launched the Series 3, a CableCard based HD-DVR.   

TIVO may have the FCC on their side.  Representative Anna Eshoo (D-Ca) said:  "I am concerned that despite the implementation of this mandate, many cable operators will either hobble or render competitive set-top boxes unusable by deploying new channel switching technology that won't work with other boxes"

While the cable operators have expressed a desire to work with TIVO to create a two-way solution for CableCards, they may drag their feet.  This would put TiVo even more behind the 8-ball.