TiVo Won

The Motley Fool ^ | 11 May 2006 | Tim Beyers

[kevkrom]

TiVo Won

http://www.fool.com/news/mft/2006/mft06051143.htm

By Tim Beyers (TMF Mile High) 05/11/2006

When I read Wednesday that News Corp.'s (NYSE: NWS) Fox brokered a deal to make available several of its shows at Apple's (Nasdaq: AAPL) iTunes music store, my mind immediately went to TiVo(Nasdaq: TIVO). "So, this is how it ends," I thought.

What I mean is that the bigwigs at the networks know that live TV, save for sports events, is over. TiVo won.

Not that couch potato surfing will go away immediately, of course. Television advertising remains a $100 billion-plus business, after all. But The Carmel Group reports that 15.6 million of us -- or roughly 15% of the TV-watching households in the U.S. -- own a digital video recorder (DVR). That means at least 15.6 million of us primarily watch recorded TV, which, in turn, means we swat ads like flies.

Fewer ads can only mean lower revenue for broadcasters. And they know it. That's why you're seeing Fox, Disney's (NYSE: DIS) ABC, General Electric's (NYSE: GE) NBC, and CBS(NYSE: CBS) flocking to iTunes. They're hoping downloads will help replace some of the revenue that's bound to be lost when the rest of us go TiVo-crazy.

Frankly, I've no idea if that plan will work. And I don't really care, either. That's not what interests me as an investor. Instead, I'm fascinated by how much TiVo has changed our viewing habits. It's no longer just about saving time; it's that we seek only the most valuable content and then save that for viewing at a time and place of our own choosing.

Think about that, and then think about this: Video downloads are increasing in popularity. Many TiVo boxes sport broadband connectivity. Isn't it a short trip between you downloading 24 from iTunes and playing the episode on your TiVo, commercial-free? I'll answer that: Yes, it is.

I've said before that Google(Nasdaq: GOOG)should buy TiVo. I still believe that. But this latest rush to downloads ought to have Apple also thinking buyout. Consider: TiVo's recent court win over EchoStar(Nasdaq: DISH) opens the possibility to royalties from DVR makers. Does Apple really want to be among that crowd? Or would it rather control the pipe and collect royalties? The same thinking applies for blending the Web and TV on a DVR, for TiVo bought the patent for that from IBM(NYSE: IBM).

I'm willing to conjecture that given the passage of time, Google won't be able to continue growing into its valuation without help from TV ads. But Apple can't let anyone else get in the middle of its downloading business. TiVo is there now with TiVoToGo for the iPod, and could be there once the rights management processes are in place to support downloads to DVRs.

In other words, both firms have legitimate reasons to want TiVo while the stock is still cheap. Can a bidding war really be that far off? Not in my book. You read it here first.

TiVois a Motley Fool Stock Advisor selection. Ask for an all-access pass, and you'll get a backstage look at all of the stocks that are helping David and Tom Gardner beat the S&P 500 by more than 35% each as of this writing. It's free for 30 days. All you have to lose is the prospect of a richer portfolio.

Fool contributor Tim Beyers has more than 100 hours of TV stored on two DVRs, including Wednesday night's episode of Alias. Don't tell him what happened, please. Tim didn't own shares in any of the companies mentioned in this story at the time of publication. You can find out which stocks he owns by checking his Fool profile. The Motley Fool has an ironclad disclosure policy.

[kevkrom]

Interesting take on the video download fad. As a TiVo owner, I know that once you go TiVo, there's no going back to VCRs. I especially love my DirecTV/TiVo combo box which lets me record two things at once, and for a much smaller fee than the standalone units. I just wish we could get some of the Series 2 features...

[theDentist]

We are Tivo. T-I-V-O.

[Blueflag]

The author misses the segue to another obvious outcome. ... decline of movie theatres

Why go to the theatre for $20/person (tickets and snacks), sit with rude patrons, fight traffic when you can watch it at home (or a friend's hom) and enjoy a far better experience on you own terms?

All desired content moves to on-demand model.

[Always Right]

All your commercials are belong to us.

[tfecw]

yeah web TV is where the future is. I don't have cable so the one show I watch, southpark gets downloaded. I'd be willing to toss a buck or so to download an episode.

Even so, there aren't enough hours in the day to sleep, work, read, play video games and watch 3-4 TV shows. I've tried doing the first 2 at once to free up TV watching time, but that didn't work out too well so TV had to go.

[Altair333]

People that don't have TIVO don't realize how great it is. It is the greatest invention ever for enjoying tv- I never watch live tv anymore, except for sporting events.

[Flyer]

That means at least 15.6 million of us primarily watch recorded TV, which, in turn, means we swat ads like flies.

When ad revenues drop to the point where I am charged to watch programs, I will watch less.

[Petronski]

I doubt video download is just a fad. This is like the early days of the internet itself. Video over the internet is the future. Only the methodology will change (becoming more transparent).

[mo]

You'll like this as well..mash here http://www.michaelrobertson.com/

[ovrtaxt]

See, there's an interesting angle. Live sports, by definition, needs to be seen live. There's an investment angle there somewhere...

[Roccus]

Since all TV and radio programming is provided for the sole purpose of filling in the time between commercials, programming, as we now know it, is over.
I'm not saying this is good or bad, just making a prediction.

[Yo-Yo]

Philips has the answer with their latest Patent filing:

Apparatus and method for preventing switching from a channel during an advertisement display

[Grampa Dave]

"Fewer ads can only mean lower revenue for broadcasters. And they know it. That's why you're seeing Fox, Disney's (NYSE: DIS) ABC, General Electric's (NYSE: GE) NBC, and CBS(NYSE: CBS) flocking to iTunes. They're hoping downloads will help replace some of the revenue that's bound to be lost when the rest of us go TiVo-crazy."

We and others have been documenting the fall of the Dinosaur Fishwraps re decreasing paid subscriptions, newsstand sales, company ads and personal ads. This just adds hi test airplane gas to their smoldering fires of impending doom.

ABCNNBCBS and the Dinosaur Fish Wraps are losing audiences,income and power every day. The congressional elections this year and the 2008 elections may be their last hurrahs in impacting elections on any scale.

[vikk]

There are a lot of different angles and wrinkles, like how digital cable boxes have DVR capability, the absolute addictiveness of something like YouTube, the potential capabilitites of something like an Xbox 360...

[ShadowAce]

[aMorePerfectUnion]

TIVO became even better when I learned to program the ->| button to do 30 second commercial jumps. So much easier.

[Grampa Dave]

"I especially love my DirecTV/TiVo combo box which lets me record two things at once, and for a much smaller fee than the standalone units. I just wish we could get some of the Series 2 features..."

Thanks for posting this article on this very interesting trend.

The TiVo love affair goes across generations. Many of our younger relatives have two tv sets with two TiVos. They record programs for their kids on TiVo and programs for them on the other TiVo. That way they can control/monitor what their kids watch, and they can avoid what my wife calls the black hole evenings on TV.

We have many retired friends with Direct TV, two tvs and two Tivos. One couple, the woman loves movies and her husband is a sports nut/addict. She records the movies to watch when nothing is on tv, and he records everything from golf to whatever seasonal sport is happening.

Another couple, we know, also, have different tastes. She is addicted to the home/room/garden improvement shows, and he is addicted to fishing/hunting/outdoor shows and is getting into the cooking/chef shows. They both love movies and use the ComCast system to order movies on their time and demand. They like the reality tv shows, 24, Alias, House and Lost. They used to rent a lot of Movie CDs, and with the new ComCast system, they seldom rent a Movie CD.

After 6 years of Dish, we will be leaving them soon. Their basic bill for the bigger channel choice with no Showtime or HBO is now up to about $55/month, and their recorders are expensive and years techwise behind Tivo. We just got an offer from Comcast for about $40/month for 12 months if we give them our Dish satellite receiver and box. Direct TV has become less expensive than Dish and has the TiVo advantage and Tivo's easy to use and record menus.

We are far less into tv than most of our friends. I'm fully retired and never have the tv on during the day time unless something earth shaking is happening. Even then, I go to Free Republic for my news. We still only have one TV, an old 14 year old RCA tv, which we are waiting for it to decide to die. My wife still works 3 days per week. On her off days, if she isn't erranding, she has the tv on for mainly background. It is usually tuned to some home improvemen show or and old movie classic. We watch tv after dinner from 7 pm, until about 10 pm. We will only own one tv.

So now our decision is to go with Comcast for a year and then go to Direct Tv or just go to Direct TV and by pass comcast all together, for our few hours of tv viewing each evening. Friday nights and Saturday nights have become black hole nights with basically nothing on our 140+ Dish Channels. A TiVo or ComCast's recorder and movies on demand will fill those 5-6 hours if we are home.

[kevkrom]

TIVO became even better when I learned to program the ->| button to do 30 second commercial jumps. So much easier.

Easier, I suppose, but I actually prefer to fast-forward over them (at FF2... what is that 6x speed?) so that if a neat commercial does happen to grab my attention, I can go back and watch it.

[Tribune7]

The only thing I've watched on television in the last several weeks has been 24 -- that includes news shows and sports.

[marvlus]

TIVO became even better when I learned to program the ->| button to do 30 second commercial jumps. So much easier.

Can you point me to where I can learn how to do this? This sounds much better than Fast Forwarding, which causes me to have to back up if I go to far. thanks.