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Best Buy, TiVo Ink Home Entertainment Alliance

9 Jul, 2009 By: Erik Gruenwedel

Best Buy Co. and TiVo Inc. July 9 said they entered into a pact designed to explore strategic alternatives in the distribution of digital entertainment, including cable programming, into the home.

Under terms of the multiyear agreement, Best Buy will aggressively market Alviso, Calif.-based TiVo’s line of digital video recorders at its 1,100 U.S. locations, including a proprietary set-top box that would enable wider consumer adoption to a growing assortment of digital services from both companies.

Minneapolis-based Best Buy was attracted to TiVo's ability to organize and deliver fractional digital content not available through cable or satellite while enabling consumers to find and time-shift broadcast and broadband content via one box, one remote and one user interface in an easy and intuitive manner, according to Chris Homeister, SVP of entertainment at Best Buy.

“Best Buy and TiVo together will open up a variety of new ways for consumers to get the most out of their entertainment experience, have more digital content choices and get on-demand access,” Homeister said, in a statement.

Specifically, Best Buy would have access to TiVo’s multiple user interface technologies, in addition to its showcase platforms and a base of about 3 million subscribers. It will also incorporate TiVo technology into its proprietary brands such as Chinese-manufactured Insignia, Dynex and others.

For TiVo, which earlier this year began selling branded DVR units in Blockbuster, in addition to offering movie streams to subscribers via Blockbuster OnDemand, the alliance amounts to approval from the No.1 consumer electronics retailer.

“We could not be more gratified with this important relationship with Best Buy,” said TiVo CEO Tom Rogers in a statement.

Richard Doherty, director of The Envisioneering Group in Seaford, N.Y., said the deal was not a surprise since the two companies have quietly worked together for some time with Best Buy the exclusive retailer of a third-party manufactured expanded hard drive for TiVo HD devices.

Doherty said Best Buy’s impressive national marketing prowess, including targeted demos throughout the year, would create greater awareness for TiVo.

He said the alliance could bring to fruition the so-called “switch digital” that TiVo announced nearly two years ago. Specifically, switch digital would allow cable subscribers with a TiVo to select channels for ad-supported VOD or pay-per-view.

“It’s essentially a private stream into the house,” Doherty said. “It could be the Best Buy-sponsored music concert or sporting event.”

In addition, Doherty said TiVo and Digeo Inc., manufacturer of the Moxi HD DVR, are the only companies allowed by the Federal Communications Commission to upgrade their boxes without an additional cable card.

He said the two devices allow consumers to access cable programming without having to lease a set-top box from the cable operator.

“Best Buy knows more and more people will prefer to pay a one-time purchase fee instead of paying Comcast $17 a month for a box,” Doherty said. “Best Buy could become the retail headquarters for non-cable set-top DVRs.” 

Cable operators offering loss leader-priced DVR boxes designed to entice and maintain subs have long challenged TiVo.

TiVo recently was awarded an additional $104 million judgment (since upheld on appeal), on top of $103 million in previous damages regarding patent infringement litigation against satellite operator EchoStar.

TiVo reported a net loss of $4.1 million in the most recent quarter, compared to income of $3.6 million during the previous-year period. Net revenue totaled $54.8 million, compared to $60.7 million last year.


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