DirecTV, TiVo Partnership in Doubt

By Ed Oswald and Nate Mook, BetaNews

January 7, 2005, 11:26 AM

DirecTV demonstrated its own DVR based on internal technology Thursday, fueling speculation that its partnership with TiVo may have soured further than previously thought. The new DirecTV DVR uses technology from NDS, a subsidiary of parent company News Corp.

"We'll support our existing TiVo customers," a spokesperson said. "But our core initiatives and new customer acquisition will focus on our new DVR."

The demonstration continues a pattern of moves that indicate DirecTV is preparing to end its relationship with the DVR manufacturer. Last year, the satellite service resigned from TiVo's Board of Directors.

TiVo, however, declined to say if the partnership with its biggest customer was indeed over. Instead, CEO Mike Ramsay told reporters that TiVo would still be producing receivers, and was busy improving its service for DirecTV customers.

The move by DirecTV could spell trouble for TiVo, says Jupiter Research senior analyst Joe Wilcox. "According to Jupiter Research forecasts, satellite-based DVRs have the greatest installed base, with cable-based DVR expected to snatch the lead in a few years. While the market consolidates around cable- and satellite-based DVR, standalone unit install base will decline steadily over the next five years," Wilcox told BetaNews.

For its part, TiVo has announced this week that it is looking beyond standalone devices, demonstrating a new high definition cable box with integrated DVR capabilities. TiVo also unveiled a new service called TiVoToGo, which transfers television programming to a laptop for viewing while on the road.

"Several companies, including HP, LG and Microsoft, launched standalone DVRs this week at CES. The declining standalone DVR market could get quickly crowded," Wilcox added. "TiVo will need to differentiate from competitors and leverage key relationships, such as with satellite providers, as competition increases."