Sony Signs Deal for TiVo’s Technology
In a move that could spur the development of digital video recorders for consumers, TiVo Inc. has licensed its personal recording technology to Sony Corp. for use in a new line of products worldwide.
The deal is a shot in the arm for TiVo, which has been forced to slash expenses to preserve its dwindling cash reserves. In addition to an undisclosed fee upfront, the company will collect royalties from Sony on TiVo-powered devices and fees from consumers for its “personal TV†service.
The first of the new Sony products could come as early as next year, TiVo Chief Executive Mike Ramsey said, with TiVo collecting $10 million to $15 million in revenue related to those products in the first 12 months. Said Gary Arlen, an independent technology and media analyst, “This could be the thing that keeps [TiVo] alive for the next year.â€
Sony, whose sales projections have plummeted in recent months, offered no clues as to how TiVo’s technology would be incorporated into new products. “No product development plans are underway at this time,†said David J. Migdal, a spokesman for Sony Electronics Inc.
TiVo was one of the first companies to develop a recorder that stores programs digitally on a hard drive instead of copying them to tapes. Although early sales haven’t met analysts’ expectations, several technology and electronics companies have lined up to challenge TiVo.
Sony was one of TiVo’s initial investors and distribution partners, but its early products were all based on TiVo’s designs. The new licensing agreement will free Sony to design products faster and to incorporate a variety of digital technologies that TiVo has no expertise in, said analyst Peter Ausnit of Deutsche Bank Alex Brown. Ausnit, who’s been critical of TiVo’s performance, said the deal is “clearly a positive†for TiVo, but the impacts are overstated. “TiVo is still burning through cash quickly, and still is sort of unable to break through to the mass market,†he said.
TiVo’s shares rose 99 cents, or 22%, to close at $5.54 in heavy trading on Nasdaq.
