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TiVo Lands Comcast Deal, But at What Price?

Digital video recorders (DVR) software player TiVo Inc. announced a strategic partnership yesterday with Comcast Corp., America's largest cable operator. The financial terms of the deal were not disclosed, but the companies said the arrangement will make the TiVo service 'widely available to Comcast customers in the majority of its markets.' The companies will work together to develop a version of the TiVo service that can run on Comcast's existing Motorola DVR set-top box platform. The premium service, which is not expected to launch until mid-2006, will be marketed under the TiVo brand. By rolling out its own DVR service on the Motorola platform, Comcast added 180,000 DVR customers in the fourth quarter of 2004. In the company's Q4 earnings call, Comcast Cable President and COO Steve Burke predicted that 2005 will be "a very big year for DVRs" and said he "would not be at all surprised if we installed over 1 million incremental DVR units during the year." Of course, TiVo will get none of that business, and it remains to be seen what portion of Comcast's DVR sales TiVo will even get after that. TiVo Chairman and CEO Mike Ramsay has staunchly refused to cut a deal with Comcast to date, arguing the terms proposed by the MSO undervalue TiVo's software. With the TiVo's board ushering Ramsey out the door, he was likely forced to bite his tongue on this deal. At the CES show in January, Ramsey said TiVo planned to sell a DVR set-top box at retail with CableCARD support, enabling the company to bypass MSOs and sell to cable subscribers directly. One has to wonder, did TiVo agree to scratch that plan to win Comcast's business?
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