Starting in the summer or autumn of 2006, Comcast said yesterday, it will begin selling a new TiVo Inc. service, featuring improved software that will run on Comcast's existing cable boxes that have built-in digital recorders. Comcast will continue to offer DVR boxes made by Motorola Inc., with Comcast-brand service, most likely as a cheaper alternative to TiVo but with fewer features. For consumers, the deal promises to offer a cheaper way to record programs without using a videotape, skip through ads, and pause live programs.
Instead of paying $100 to $250 or more for a special TiVo box, plus a $13 monthly subscription fee, consumers using Comcast's package will get TiVo functions included in the monthly digital cable box rental fee. Comcast now charges a $10 premium for its digital video recorder service, but it has not said how much it plans to charge for TiVo or how it will split profits.
Nevertheless, investors cheered the deal as a sorely needed lifeline for TiVo. The Alviso, Calif., company has 3 million subscribers but had widely been seen as doomed to losing customers to cheaper digital video recorder services. TiVo shares soared nearly 75 percent in trading yesterday, closing up $2.87 at $6.70.
''It's probably a smart move for both of them," said James Penhune, a video market analyst with consultants Strategy Analytics Inc. in Newton Highlands. ''TiVo is the noun and the verb associated with time-shifted video right now."
Penhune compared the TiVo brand name and reputation to the allure of Apple Computer Inc.'s iPod digital music players. ''Being able to say 'TiVo by Comcast' is like being able to say 'iPod by Hewlett-Packard.' It's a very strong brand to link up to," Penhune said.
Mark Hess, Comcast's vice president of digital television, said, ''They've got this brand and track record and customer loyalty, and we expect they'll be able to keep us ahead in the market." Some of the features TiVo offers that Comcast does not, Hess said, include the ability to use a Web-connected computer to schedule recording and a program menu that's ''a little more advanced than us."
Other unique TiVo services include directories that let users search program schedules to find upcoming movies with a specific actor, and a feature that suggests programs people who record a show might also want to watch.
Comcast said it signed up 140,000 customers for its digital video recorder set-top boxes in the last three months of last year, a number some analysts think looks weak. ''If Comcast's DVR subscriber additions were satisfactory, they wouldn't be doing this deal," said Ford Cavallari, a senior vice president of Boston consulting firm Adventis and head of its broadband and media practice. Comcast requires subscribers to pay for premium digital cable coverage to use its DVR box. Currently fewer than 9 million of its 21.5 million subscribers pay for digital service.
Cavallari also said satellite companies such as DirecTV Group Inc. that bundle TiVo boxes with their service have used them as a powerful wedge to woo customers from Comcast and other cable carriers. ''If you want to switch the satellite guys back to cable, you've sort of got to give them TiVo," he said.
The TiVo-Comcast pact runs for eight years but is nonexclusive, and TiVo hopes the Comcast endorsement will help it open doors at the cable units of Time Warner Inc., Cox Communications Inc., and others. Brooke Tyson, a spokeswoman for RCN Corp., which provides cable and telecommunications services in parts of Boston and 15 suburbs, said, ''We're pleased that TiVo is now in the cable market, and I think you can expect to see deals with additional cable companies soon."
Peter J. Howe can be reached at email@example.com.