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Is There Room for TiVo in the Platform Wars?

Before streaming video services like Netflix were cutting into the cable and advertising businesses, TV viewers were fast-forwarding through ads with the help of TiVo (NASDAQ: TIVO).

The success of TiVo's digital video recorder (DVR) products had far-reaching consequences for cable networks and advertisers. The rise of TiVo's DVRs anticipated the popularity of subscription video on demand (SVOD) services like Netflix and Disney-owned Hulu by allowing users to transform live TV into on-demand content. TiVo also helped fuel the "sports bubble" that saw advertisers drawn to live sporting events over all-too-often DVR'd non-sports content.

But the success of Netflix and other on-demand services -- including Hulu, which makes episodes of many shows available just one day after they air -- has lessened the appeal of the DVR, even as legacy pay-TV providers have started cutting TiVo out by providing their own DVR devices.

TiVo's platform also supports some streaming apps, but comparatively cheap Roku (NASDAQ: ROKU) and Amazon (NASDAQ: AMZN) Fire TV devices have been much more successful than TiVo DVRs at capturing the market for platforms that make "dumb" TVs "smart." Now, TiVo is hoping to change that. At CES 2020, TiVo unveiled a new device to go with a new-look platform. TiVo's strategy seems clear: It's taking aim at Roku and the rest of the streaming platforms.

Image source: Getty Images

TiVo's new device

TiVo devices have always shipped with TiVo's software on board, and modern versions of TiVo's platform offer apps for some major streaming services. But the platform and apps have thus far been a secondary part of TiVo's appeal. TiVo's DVR models are routinely priced in the hundreds of dollars, a far cry from the $30-$35 that can buy a non-discounted streaming stick from Roku or Amazon, or even the $40 or $50 that will get buyers into 4K-compatible territory. TiVo has long been a company that sells DVRs and happens to have a streaming platform, not the other way around.

But TiVo's big splash at the tech trade show CES in January may have changed that. TiVo unveiled a product called the TiVo Stream 4K. A small dongle attached to a short HDMI cable and accompanied by a remote with a shortcut button for Netflix, TiVo's new product looks a lot like a Fire TV or Roku device. It acts like one, too. The TiVo Stream 4K is all about streaming -- there's no legacy pay-TV involved here to record.

Most importantly, the TiVo Stream 4K costs $69.99. That's a pretty typical price for a 4K streaming device, and a far cry from the higher prices that TiVo's DVRs go for. Maybe TiVo can compete in a high-tech era, after all.

TiVo's platform and content aspirations

TiVo's device is designed to lure more people onto TiVo's platform, which is a modified version of Google's Android TV platform. Unlike Roku, though, TiVo's platform doesn't display a smartphone-like home screen full of app icons. Instead, TiVo draws its UI design inspirations from the familiar cable channel guide of our collective legacy pay-TV past. The benefit here is that users don't have to jump in and out of individual streaming apps to find shows they want to watch, and they can instead scroll through the listings more like they would using a universal channel guide interface.

Populating this "channel guide" will be content that includes live TV -- not cable or satellite live TV, but streaming live TV. For that, TiVo is relying on a partnership with Dish's (NASDAQ: DISH) Sling TV. Users will also be able to record and time-shift live content from TiVo, meaning that this latest TiVo device still includes TiVo's most iconic feature.

Also included in TiVo's new platform will be TiVo's own streaming service, TiVo+. Launched late last year, TiVo+ is an ad-supported on-demand (AVOD) streaming service. The advertising revenue associated with this service is the most obvious way in which TiVo's new strategy will make the company money.

An uphill battle

TiVo's pivot toward more affordable streaming devices seems like a common-sense move; there will certainly be more growth in the streaming platform space than in the legacy pay-TV recording space in the years to come.

But TiVo is also very late to this party. Roku has been sitting pretty atop this market segment for some time now, and Amazon's Fire TV is not far behind. Both platforms have a years-long head start on TiVo, and both have ad-supported streaming services of their own (IMDb TV and The Roku Channel). And while TiVo's newest device is at a pretty typical price point for a streaming device, it's not as cheap as the cheapest device in either the Roku or Fire TV line. It's clear why TiVo would want to be in this space, but much less clear that there is any room for the company in it.

If TiVo manages to carve out a niche, it will likely be because of its familiar brand and nostalgic appeal to longtime legacy pay-TV customers -- something that TiVo seems to be wisely leaning into with its old-school, cable-inspired UI.

Time will tell if the customer base TiVo is targeting will abandon cable for TiVo without going so far as to adopt one of the more popular platforms native to the streaming era.

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