The deal announced this week whereby Virgin Media has chosen TiVo as its DVR for the future is a massive change to TiVo and one we have been predicting ever since it won its US court case over royalties with the Dish Network. It can now begin to push it case for either getting royalties or custom from cable and DTH suppliers overseas and may even begin going after major IPTV platforms. It has already taken legal action against other suppliers in the US since its success with Dish.
Virgin has a cable network as part of its quadruple play in the UK, which is taken in about 3 million homes.
But this deal goes a lot further than relying on the simple capabilities of digital video recorders, and the massive success of BSkyB, itself controlled by News Corporation, selling an NDS designed DVR in the UK, means that Virgin needs something else with which to hit back.
It has always been assumed that Sky had its own TiVo license through NDS, simply because TiVo has long been a strong partner to DirecTV in the US, which until recently was owned by News Corp. But since those rights all now reside with a subsidiary of Liberty Media, it is more than possible that the patents war over DVRs may spill over into the UK and Europe.
This new strategic partnership between TiVo and Sky rival Virgin Media means that TiVo will now develop a converged television and broadband interactive interface to power Virgin Media’s next generation, high definition set top boxes. The terms of the deal were not disclosed.
TiVo already has a mass of experience in sending programming, controlling new forms of advertising, managing hardware, and returning audience data over a broadband line. In the UK Sky owns its own ISP, and has much the same experience, while Virgin offers cable based broadband at 50 Mbps but has done very little to upgrade its DVR capability.
But by becoming the exclusive provider of middleware and user interface software for Virgin Media’s next generation set top boxes TiVo has an opportunity to reach at least 3 million homes within one generation of set top replacement, probably over a 3 year period, to go with the 4 million customers it has in the US. If it can prove a success at Virgin, there is every chance that it could make the move into the continent, where Numericable dominates France, but particularly where Sky Germany is up against Liberty Global in Germany. Liberty Global just bought Unity Media, the second largest German cable operator which is in a straight fight with Sky Germany for customers.
As far as we are concerned this all stems from the intellectual property legal wins in the US, and makes TiVo a real threat to set top makers all over Europe and subsequently further afield. Pace, which dominates in DTH and which is also strong in DVB-T set tops, and which in particular is strong in HD DVRs, will feel an immediate threat with the arrival of TiVo on its doorstep. Pace is one of the leading suppliers to both cable in the US and DTH and in particular Sky set tops based on the NDS design. TiVo will suddenly be selling its TiVo service in the UK for the first time ‘ its own platform of advanced EPG which includes all of its abilities to choose and store programming based on same actors, directors or genre, as well as push VoD and push advertising services.
Neil Berkett, CEO of Virgin Media said, “TiVo’s proven track record of innovation, strength of its patented technology and experience in developing best in class user environments, make it an ideal strategic partner for Virgin Media as we move aggressively to bring our next generation TV service to market. The superiority of our fibre optic network combined with TiVo’s capabilities, will allow us to offer consumers the most significantly advanced and compelling TV service available in the UK, and we believe will do to the TV market what Virgin Media has done to the high speed broadband market.”
TiVo is expected to add advanced search and EPG facilities VoD integration with broadband delivered video. However in the US, TiVo has cut a deal with Netflix for its leading online film delivery service which works over the internet, whereas Virgin in the UK has fewer internet services with which to partner and may have to build its own. Virgin Media currently anticipates its first TiVo co-branded product in 2010.