TiVo Downplays RS-DVR Threat

TiVo Inc. (Nasdaq: TIVO) chief Tom Rogers shrugged off the potential threat posed by the network digital video recorder (DVR) after a recent court ruling cleared the way for Cablevision Systems Corp. (NYSE: CVC) to move ahead with its RS-DVR.

"I think probably the more significant issue from a TiVo point of view is that we don't see this ruling having anything to do with our business relationship with the cable world," said TiVo president and CEO Tom Rogers during Wednesday night's company earnings call. (See TiVo Posts Q2.)

While TiVo agreed with some of the elements of the case, particularly when it comes to the copyright question, "our view is that there are a lot of legal issues that still need to be resolved on that front and have not by any means yet [been] clarified," Rogers said.

Rogers was asked for an opinion on the subject after, earlier this month, the U.S. Court of Appeals for the Second Circuit ruled that Cablevision's RS-DVR does not directly infringe copyright rules and should fall under the same protection given to stand-alone DVRs. But that may not be the end of it. It's expected that the plaintiffs in the case, which include ABC Inc. , NBC Universal , Twentieth Century Fox, and Paramount Pictures Corp. , among others, could move to take the issue to the U.S. Supreme Court. (See Court Resurrects Cablevision's Network DVR and Network DVR Still Paused .) Time Warner Cable Inc. (NYSE: TWC), pioneer of the "Start Over" service, has already shown some interest in the RS-DVR concept. (See Time Warner Cable Eyeing Network DVR Case .)

Rogers said TiVo's technology and services can play significant roles regardless of where content is being recorded and held. "We are relating to cable based on our user interface, our search and overall consumer experience that are independent of where the storage capacity lies – be that in the home, the headend or wherever," he said.

However, he did articulate a belief that the cable industry has "total inadequate capacity at this point for broad scale deployment of a network DVR solution," particularly when it comes to the recording and storing of individual HD streams during prime time. That, he said, "is beyond the realm of most cable operators' capacity," Rogers said.

Before Cablevision was hit with the original lawsuit and mothballed the RS-DVR, the MSO had begun to test the service with about 1,000 "friendlies," providing each with 80 gigabytes of dedicated network storage on servers from Arroyo Video Solutions, which is now part of Cisco Systems Inc. (Nasdaq: CSCO). (See Inside Cablevision's 'RS-DVR' and Cisco Snatches VOD Vendor Arroyo Video .)

Still bullish on cable
Despite the specter of a ruling that favors the RS-DVR, Rogers said TiVo remains bullish about its cable industry prospects.

Comcast Corp. (Nasdaq: CMCSA, CMCSK), TiVo's highest profile partner in the category, recently expanded its offering of Motorola Inc. (NYSE: MOT)-made set-tops with the TiVo service on board to its Connecticut properties. Comcast, which is also gearing up for a TiVo marketing tilt, initially deployed the TiVo service in the Boston area. Cox Communications Inc. has launched a TiVo trial in its New England-area systems, and is "on track" for a commercial launch later this year. (See Comcast Expands TiVo Footprint .) Among other service providers, TiVo is also working with Cablevision Mexico and Seven Network Ltd. of Australia.

Despite recent progress, one important hurdle hasn’t been cleared -- the ability to activate set-tops with TiVo without a truck roll. Comcast and Cox are both moving toward a model that would enable boxes to be TiVo-enabled via a download. Rogers blamed that lack of progress on third-party work that has yet to be completed.

Comcast and TiVo are also in the process of porting the service to the Cisco set-top platform, but no rollout plans are being discussed because the project remains in the development phase. (See Comcast Funds TiVo App Expansion.)

Rogers noted, however, that Comcast is looking for a broader TiVo rollout using tru2way , a uniform headend and middleware platform. TiVo is developing a tru2way box, but has not yet released any product details or a launch timeline. Although the cable industry has made some concessions that will ensure that TiVo's user interface and associated services would be preserved in a tru2way environment, TiVo has yet to sign the tru2way "Memorandum of Understanding" originally negotiated by Sony Corp. (NYSE: SNE) and the six largest incumbent U.S. cable operators. (See TiVo à la Mode , Revealed: The Tru2way MOU, Sony Supports tru2way, More Firms Go the Way of Tru2way, and tru2Way Tallies Two More.)

— Jeff Baumgartner, Site Editor, Cable Digital News