Cox, TiVo Strike a DVR Deal
Cox Communications Inc. and TiVo Inc. (Nasdaq: TIVO) are setting out to prove that the cable and consumer electronics industries can indeed work together without having to resort to divine (or FCC) intervention.
In a deal announced early Thursday, Cox has agreed to promote and support TiVo's new broadband-ready Premiere HD-DVR at retail and to take full ownership of all the installation hassles that go with it. (See Cox, TiVo Connect at Retail , TiVo 'Premiere' DVRs Go Retail, and New TiVo DVRs Built for Web & Cable Content.)
Cox is also integrating its video-on-demand (VoD) service, which currently holds about 15,000 hours of titles, while also embracing the box's ability to feed in Web video from TiVo's wide range of partners, which include Netflix Inc. (Nasdaq: NFLX) and Amazon.com Inc. (Nasdaq: AMZN).
This is the first US example of a retail set-top that integrates cable linear and on-demand video services with broadband video, plus a third-party interface (TiVo's, in this case). Panasonic Corp. (NYSE: PC), which just scuttled its tru2way TV products, baked in only two of those pieces -- cable linear and on-demand video. (See Panasonic Tunes Out Tru2way TVs .)
"We like providing more choice, and being in the business of linear and on-demand video, but we also fully understand consumers like access to broadband video," Cox VP of product development Steve Necessary tells Light Reading Cable. "This is a way to basically get both in the same box in a fashion that's pretty darn fast."
Cox has committed to support the TiVo box in its "major" markets, phasing some of them in starting early next year. The MSO isn't saying which markets will offer that support first, but some candidates include Phoenix, Northern Virginia, San Diego, and Los Angeles.
Necessary says the retail arrangement supersedes earlier work that involved porting TiVo's software to Motorola Inc. (NYSE: MOT) set-tops. That work is being mothballed in lieu of this new, retail-focused arrangement. (See Cox Tees Up TiVo Test Bed .)
Jeff Klugman, TiVo's SVP and general manager of products and revenue, says the ability to combine cable VoD with OTT video will give consumers a "complete, comprehensive look across all episodic television." By way of example, Cox's VoD service can offer the current season of a given series, while Netflix provides streaming access to the past seasons.
"You're stitching together what were previously disparate [release] windows," Klugman says.
The Cox-TiVo relationship is bad news for tru2way.
TiVo's Premiere boxes don’t use tru2way to enable interactive cable services like VoD. Instead, TiVo uses an IP backchannel to set up the video sessions between the box and an MSO's on-demand platform and to supply metadata to the TiVo guide/search apps. TiVo has already completed that integration with SeaChange International Inc. (Nasdaq: SEAC)'s Axiom back office, though SeaChange itself has acknowledged that nothing prevents other VoD vendors from mimicking that work.
Similar to TiVo's deals with two other cable ops -- RCN Corp. and Suddenlink Communications -- Cox will also stitch its VoD system to TiVo using the IP back-channel approach. Cox expects to be fully standardized on the SeaChange back office by the end of 2010. (See Cox VOD Effort Matches Vendor Rivals , TiVo: Cable Should Love It Some IP, and Suddenlink Boxes Up TiVo Deal .)
The big difference, Klugman says, is that Cox will be supporting and provisioning the Premiere boxes customers purchase at retail. In comparison, the RCN and Suddenlink agreements call for the operators to buy those boxes directly from TiVo while retaining the billing and subscription relationship with the subscriber.
Cox has also agreed to foot the bill on expenses tied to truckrolls and other installation requirements for TiVo Premiere boxes. That extends to special tuning adapters that Premiere boxes will need in order to view channels Cox delivers using switched digital video (SDV). For now, that requirement is limited to Cox systems serving Northern Virginia, Los Angeles, Phoenix, and a few other markets. Cox customers still have to pay Cox $2 per month to lease the CableCARD required to authorize cable TV services. (See Everyone Hearts the Tuning Adapter! and Policy Watch: TiVo, Cable Trade SDV Barbs .)
"They [Cox] won't leave the person's home until the tuning adapter is working, the VoD is working, the linear TV is working, and the CableCARD is working," Klugman says. "That is all part of the full installation experience, funded by Cox."
Although TiVo's Premiere box doesn't use tru2way, Cox has already outfitted all of its headends for tru2way. It's using a tru2way-based guide and boxes from Cisco Systems Inc. (Nasdaq: CSCO) to back a premium video tier that includes a multi-room DVR. Cox currently has that service in front of "friendlies" in two undisclosed markets (one based on Cisco's digital cable platform, the other on Motorola's), but expects to have it rolled out "extensively" by the end of 2010, according to Necessary. (See Cox Guides Tru2way Forward.)
The regulatory landscape
The Cox-TiVo retail deal comes into view as the Federal Communications Commission (FCC) chews on some new CableCARD rules and starts up an "AllVid" inquiry aimed at figuring out how to spur the retail market for video devices, including set-tops, across the cable, telco, and satellite TV landscape. (See FCC Floats 'Simple' Gateway, CableCARD Rules and Cable: FCC's AllVid Goes Too Far .)
So was this put together to show the Commission that cable and the consumer electronics industry can indeed work together without a regulatory oversight?
"To be clear, that was not a driver in this agreement," Necessary says. "But it's also fair to say… that it's a positive example of how cable and the CE industry can in fact work together… under the influence of normal, good market forces."
— Jeff Baumgartner, Site Editor, Light Reading Cable