TiVo puts its VOD eggs in Unbox

Pacts with Amazon to offer digital-download service

TiVo is getting into the VOD business by way of a partnership with Amazon and its Unbox, a recently debuted product that sells and rents digital downloads of feature films and TV shows.

Representatives from both companies said they will reveal details of their offering today and that it already is in beta testing, with plans to roll it out to all users of broadband-enabled TiVo boxes no later than year's end.

The announcement comes one day after Wal-Mart said it has gotten into the digital-download business, letting beta users of its new product buy movies and TV content for viewing on computer screens and hand-held devices, much like Amazon's Unbox and Apple Inc.'s iTunes.

But through TiVo, Unbox hopes to lure early adopters away from iTunes and Wal-Mart, as well as encourage new consumers to try Internet-based VOD even if they're not interested in viewing movies on computer screens.

"So long as you have a browser and can get to Amazon.com and have a broadband-connected TiVo, you can purchase movies from any computer in the world," said Roy Price, director of digital video at Amazon. "You just tell Amazon to send 'Little Miss Sunshine' to your living room TiVo, and it will be there."

TiVo has been down this path before, having spoken of a VOD relationship with Netflix a few years ago, though a product never materialized. Instead, Netflix launched its Watch Now initiative without TiVo, though that product is for renting movies to watch on computers only.

TiVo programming GM Tara Maitra said negotiations with Amazon began late last year, and beta testing started in December. The technology comes courtesy of TiVoCast, which TiVo unveiled in June; it lets broadband users download certain Internet content that shows up on their Now Playing screen just as a recorded TV show does now, and as an Unbox movie will.

"This is our move to deliver premium content," Maitra said. "This is the first product out there — among all the noise — that truly combines all your TV viewing options in that easy-to-navigate experience you get with TiVo."

Some of that "noise" is coming from Apple Inc., which plans to release a $300 set-top box called Apple TV this month. The box will allow video content purchased through iTunes to be viewed on TV screens.

"Apple TV is an appendage, a media extender," Maitra said. "With TiVo, it's your first opportunity to download content directly to the television."

Unbox has rights to sell and rent digitally downloaded movies from more than 30 studios, though not from Walt Disney Co. Price said that not all Unbox movies will be eligible for the TiVo treatment — Sony, for example, is a holdout for now — though negotiations are ongoing. "The goal is for 100% of the Unbox titles be downloadable to TiVo. I'm confident we'll achieve that goal," he said.

He suggested that even Disney, which so far appears to be favoring iTunes over competing services, might embrace Unbox in due time. "That situation will be remedied quickly," he said. "We already have an extensive relationship with Disney on the DVD side."

While the TiVo-Netflix relationship was greeted years ago with hype and a temporarily rejuvenated stock price for TiVo, some analysts expected a guarded response this time around despite technological advances and assurances that the product already is being tested.

"The question remains for TiVo: How many subscribers will this generate?" asked Sean Badding, president and senior analyst at the Carmel Group. "Short-term, it's a marketing win, but we need to see strong sub growth in the next 6-12 months before we deem it a successful venture. It certainly bodes well that Amazon and TiVo are both household names."

Amazon and TiVo said their relationship — the financial details of which were not disclosed — is nonexclusive. Price wouldn't say how many movies and TV episodes have been rented or sold through Unbox, though he said that consumers return to Unbox in a higher rate than any other store Amazon has launched.
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