TIVO STRUGGLES FOWARD AFTER DIRECTV DIVESTMENT

Company Shifts More Focus to Internet and Away From Cable TV

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NEW YORK (AdAge.com) -- In the wake of DirecTV's announcement that it has sold its stake in TiVo, the digital video recorder pioneer has cut its prices and announced the introduction of new strategies and services.
DirecTV's divestment of its TiVo stake is the latest setback for the digital video recorder pioneer.
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DirecTV supplies the majority of TiVo's subscribers.

'Nonessential asset'
On Monday, DirecTV sold some 3.5 million shares of TiVo, saying the sale was in line with a policy of selling nonessential assets. A few days earlier, Eddy Hartenstein, vice chairman of the DirecTV Group Inc., resigned from the board of directors of TiVo Inc.

A TiVo spokesperson said the current pact under which DirecTV distributes TiVo remains intact but the partnership's strength and long-term potential have been called in question, observers say. Only 68,000 of the 264,000 new subscribers added in the fourth quarter of 2004 came from TiVo itself. The rest were driven by DirecTV. TiVo has 1.6 million total subscribers, according to its fourth-quarter financial statement.

Latest setback
It was the latest setback for a company that has pioneered an increasingly popular technological concept that it has been unable to fully exploit for its own benefit. After faltering in its attempts to sell its set-top boxes through retail outlets, TiVo switched to an "Intel inside"-type strategy that depended on signing technology-licensing deals with cable operators to augment its relationship with DirecTV. It hired former NBC executive Marty Yudkovitz a year ago to lead that charge, but to no apparent avail.

In another blow, Comcast, the largest cable company in the U.S., recently decided not to go with TiVo technology as the core of their nascent DVR offering.

Now, TiVo says it will point its efforts more toward the Internet than cable TV with the goal of becoming "the entertainment centerpiece in the networked home."

Computer connections
It said its $12.95-a-month subscribers now have the ability to connect their home computer or network of home PCs to TiVo to download photos or music. The photos can be viewed on their TV screens.

The company is also slashing to half price the cost of a home's second TiVo box and plans to promote the fact that programming can transfer between TiVo-enabled TVs in the home. If someone is watching a show in the living room, they can continue watching it in the bedroom.

Another Internet-oriented new offering lets consumers schedule TiVo recordings from a Web site.

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