New Service by TiVo Will Build Bridges From Internet to the TV
By JOHN MARKOFF
he Internet, in jumping past the personal computer and into the living room television set, is starting to give viewers the possibility of bypassing traditional cable and satellite services.
TiVo, the maker of a popular digital video recorder, plans to announce a new set of Internet-based services today that will further blur the line between programming delivered over traditional cable and satellite channels and content from the Internet. It is just one of a growing group of large and small companies that are looking at high-speed Internet to deliver video content to the living room.
The new TiVo technology, which will become a standard feature in its video recorders, will allow users to download movies and music from the Internet to the hard drive on their video recorder. Although the current TiVo service allows users to watch broadcast, cable or satellite programs at any time, the new technology will make it possible for them to mix content from the Internet with those programs.
"This is the fourth electronic video service, and it is an alternative to cable, satellite and broadcast television," said Tom Wolzien, an analyst at Bernstein Investment Research and Management. Those traditional services, Mr. Wolzien said, "have been the monster gatekeepers, but this is a way for content providers to get past them."
In the new world of Internet-connected television, viewers will not have to worry about when a show is scheduled or from where it comes.
"We're fully committed to developing an entertainment experience you can't get over normal broadcast television," said Michael Ramsay, chairman and chief executive of TiVo. "This is what we think the future of television is."
A timetable for introducing the video service has not been set, nor has its price.
TiVo sustained a big blow Tuesday when DirecTV, the satellite television provider and the biggest source of new subscribers for the TiVo service, said it had sold its entire equity stake of 3.4 million shares in TiVo. Shares of TiVo dropped more than 14 percent to close at $6.41.
There is some speculation in the industry that DirecTV is moving toward developing its own digital video recorder. Several analysts suggested TiVo is moving toward Internet downloading as a way to insulate itself against potential competition from DirecTV.
Last year TiVo, which has 1.6 million subscribers who use its digital video recorder with cable or DirecTV, acquired Strangeberry, a small Silicon Valley start-up that had developed a new technology to view Internet video streams. TiVo is now developing that technology and plans to integrate it into the TiVo system next year. Video distributors like Netflix, RealNetworks and Blockbuster are also starting to explore the possibility of delivering feature-length movies via the Internet to users for viewing later.
"We're no longer in a world where innovation is stopped because somebody is the only game in town," said Rob Glaser, chief executive of RealNetworks, a Seattle-based company that now streams audio and video to computer users through the Internet.
The idea of downloading and storing video for conventional television viewing has until now been pioneered by a small group of technology companies like Akimbo, a maker of an Internet digital video recorder that is based in San Mateo, Calif.
Because most Internet connections do not yet reliably support data speeds needed to view television-quality video as it is streamed, a number of the Internet video services require that programs first be downloaded and stored on a hard drive before viewing.
Now, as broadband Internet becomes widely available in homes and new wireless video networks make it simpler to move video data and streams inside the home, bigger players are starting to emerge.
For example, Microsoft demonstrated a service called IPTV at the Consumer Electronic Show in Las Vegas this year. The company believes that it is possible to deliver television to rival today's cable programming by using commonly available standard telephone lines, as part of what are called digital subscriber line, or D.S.L., services. It is running two small trials of the technology in Canada and Switzerland, and sees a broad potential.
"We sort of expect that TV will shift to where everyone will watch what they want when they want," said Peter T. Barrett, chief technology officer for Microsoft TV.
Microsoft executives argue that the technology would be a boon to telephone companies who are now searching for new revenue streams in the face of increasing pressure on their traditional voice-calling businesses. "Every single phone company has to be thinking about video," said Lynne Elander, general manager of marketing for Microsoft TV.
But executives at telephone companies said they were not moving quickly to deploy the Microsoft technology.
Both Verizon and SBC are engaged in trials and deployment of fiber optic networks, which offer significantly higher speeds than existing D.S.L. services. "The jury is still out on IPTV, we have to see how it works," said Eric Rabe, a spokesman for Verizon.
Smaller firms, however, are not waiting for competition to grow in this field. On Monday, Broadband Networks Inc., a start-up based in Los Gatos, Calif., introduced a service it called TimeshiftTV. The new service, using a $299 digital video recorder, will initially focus on offering video programs in eight foreign languages when it is available in December.
Broadband's chief executive, Bob Burke, said the company would try to license its technology to other companies.
The main challenge facing Internet video distribution is that streaming DVD and HDTV-quality video will require data rates above 5 megabits a second. That is far beyond most D.S.L. network speeds today, which generally range from 300 kilobits to 1.5 megabits.
Indeed, even downloading and storing high-definition video for later viewing at most D.S.L. speeds may not be economical. Sending the data stored on a DVD disk over the Internet at those speeds might take several days, making it a poor competitor for "sneaker-net" services like Blockbuster, which require the viewer to walk or drive to the store.
But for standard video quality, the economics may already work, according to a recent Bernstein Research report. It costs just 15 cents an hour to stream standard video across a D.S.L. connection, Mr. Wolzien said, and those costs are falling.
Whether Internet delivery of programming will be a serious threat in the near future to traditional broadcasters remains a matter for debate among industry executives. In any event, they also expect to capitalize on the new technology. As Steve Burke, president of Comcast Cable, the nation's largest cable operator, said recently in a phone interview, "We're big believers that the Internet is the future."
Internet TV real soon
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