Is Sony Tivo's IPO Big Brother? : Company may get brand recognition with Japanese Co's backing

Electronic News, Sept 13, 1999 by Peter Brown

Sony Corp. of America's decision to form an agreement Tivo Inc., Sunnyvale, Calif., may send Tivo soaring in the stock market as the company gears up for its initial public offering (IPO), which is expected to take place soon.

All indications are that Tivo, an unproven company that is pushing a new type of product that is priced at $500, may have some trouble finding brand name recognition. Given this, an IPO for the company may not be as successful if it is unable to obtain customers.

Having Sony in its corner changes that. Analysts speculate this big-brother type of relationship with Sony may indeed help Tivo as products begin to roll out with the Sony label.

On a basic level, Tivo's PersonalTV is a VCR replacement. But more than that, Tivo enables a feature known as time-shifting, wherein television shows can be viewed in their entirety with the start time and the end time displaced by a period of time.

For example, if a viewer chooses, he can watch a television show that begins at 8 p.m. and ends at 9 p.m. from 8:10 p.m. to 9:10 p.m. instead, or from 8:30 p.m. to 9:30 p.m. Consumers can rewind and fast-forward their televisions. They also can pause the show they are watching for as long as 30 minutes.

Tivo utilizes a hard disk drive as the main memory eliminating the need for VHS tapes. This way a user can also record shows weekly, monthly or at any given time, as along as they have enough hard drive space.

Tivo already has Philips Electronics N.V., HBO, NBC, America On-Line, TMC, Showtime and DirecTV Inc. as supporters, so the Sony agreement only helps to further solidify its position in the market. Tivo also has investments from CBS, Comcast Corp., Cox Communications, Walt Disney, TV Guide Interactive, Discovery Communications and Encore Media Group.

Replay Networks, Tivo's chief competitor, whose ReplayTV does the same time-shifting feature as Tivo's PersonalTV, recently received $57 million in strategic investment from media giants Time Warner, Walt Disney Co. and NBC. Other investors in Replay include Showtime Networks Inc., Liberty Media Group, Matsushita Electronic Industries Ltd., United Television Inc and various venture capital firms.

All of these investments and agreements for both companies prove this time-shifting feature is becoming a hot-button item and something that obviously large media and consumer electronics manufactures are taking a vested interest in. With the support garnered by both companies, Tivo would be hard-pressed not to do well initially in the stock market.

The agreement will result in the manufacturing of what Sony calls personal video recorders. Sony said it will add entertainment content to the Tivo service as well. This may include motion pictures, music creation, distribution and television programming, such as interactive gaming and data services.

Sony plans on using content from its Sony Pictures Entertainment, Sony Music Entertainment and Sony Online Entertainment groups to support the Tivo service.

Tivo is already shipping set-top boxes (STBs) by Philips and the market should see boxes from AOL and some sort of box in conjunction with DirecTV in the near future as well. Replay Networks should also have STBs out on the market in the near future from Panasonic, Matsushita's subsidiary, and other ReplayTV partners.