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TiVo Hopes to Reign in Spain

Jeff Baumgartner
LR Cable News Analysis
Jeff Baumgartner
7/1/2010
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TiVo Inc. (Nasdaq: TIVO)'s international expansion plans got a boost Wednesday when the DVR pioneer announced a deal to supply software and services that will power a "next generation TV" initiative underway at ONO , Spain's largest cable operator.

In many ways, the agreement closely resembles the one TiVo notched with UK-based Virgin Media Inc. (Nasdaq: VMED) in late 2009, as TiVo won't be supplying ONO with consumer hardware. Instead, it will contribute the software and services (including the underlying navigation system) that will run a new line of DVR and non-DVR set-tops that ONO will use to fuel its coming video services strategy. (See Virgin Presses 'Play' on TiVo and TiVo Coming to Virgin's Non-DVRs, Too.)

ONO, which has nearly 1 million video service customers, and which has been using boxes and conditional access systems from Motorola Inc. (NYSE: MOT), intends to put TiVo's services and software on new boxes from Cisco Systems Inc. (Nasdaq: CSCO) outfitted with security from Nagravision SA . (See Spain's ONO Goes With TiVo.)

Joshua Danovitz, VP and GM of TiVo's international business, insists the company is perfectly fine with deployments that allow carriers to pick and choose their box vendors. And that's just as well, as that model has become core to TiVo's strategy outside its home turf.

It's also becoming more commonplace in the US, as TiVo is growing less reliant on hardware, instead porting its software and services to third-party boxes and broadband-connected TVs. (See TiVo Building tru2way Version of New Interface and TiVo Starts Thinking Outside the Box.)

TiVo's been seeking direct carrier deals and contracts outside the US in the hope of shoring up its eroding customer base. In the first quarter, TiVo lost about 100,000 subscribers, leaving it a total of 2.5 million.

And there's no telling when the ONO deal will start making a contribution to TiVo's subscription pile, because the MSO has yet to say when it plans to launch the service.

But when it does, it will use it to protect and expand its customer base, as it continues to face stiff competition from over-the-air terrestrial, satellite, and IP-delivered video competition. (See Telefónica Trials Interactive Ads.)

In addition to its regular lineup of linear and on-demand video, the new Cisco boxes will be capable of ingesting content from the Internet and taking advantage of ONO's new Docsis 3.0 infrastructure, which is delivering 100 Mbit/s and 50 Mbit/s downstream services in some areas. (See ONO! Another Docsis 3.0 Story!)

Those TiVo-powered products, however, could also give ONO an opportunity to attract customers outside its traditional footprint. The boxes under development are being designed to support free, terrestrial-delivered, digital TV services as well as a broadband link to ONO's video-on-demand products.

ONO hasn't detailed how it will market or price such an offering, but "the combination of broadband and broadcast is key," Danovitz says. "The fact that digital terrestrial is becoming competitive, combined with telcos that offer television [services]… has really made everyone have to step up their game."

— Jeff Baumgartner, Site Editor, Light Reading Cable

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