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Your next gaming console may also be a DVR.
Video gaming news website Kotaku has unearthed a patent granted to Microsoft (Nasdaq: MSFT ) last week, detailing a DVR app that allows console owners to record TV content on their system. Users can record shows while playing games or even while the console itself is turned off.
Is the DVR application part of the eventual successor to Microsoft's Xbox 360? Will it even have to wait that long, assuming that the software giant can offer up slower cloud-based storage in lieu of using up precious hard drive space?
Television integration has been a major part of the recent Xbox upgrades. Armed with 35 million Xbox Live gamers, Microsoft has recently struck deals with major cable providers and networks to give its growing base of Web-tethered players easier access to video content. Integrating motion-based Kinect controls to navigate viewing experiences may even find Microsoft ahead of what Apple (Nasdaq: AAPL ) is cooking up on its end with a rumored Siri-based controller for a full-blown TV later this year.
However, lost in this announcement is what this would mean for TiVo (Nasdaq: TIVO ) . Sure, having someone else selling a non-TiVo DVR -- even if it's merely an application -- would seem to be a negative. However, if the Microsoft DVR is to be actually useful, won't it eventually trample on some of TiVo's own patents?
We're finding out that it doesn't pay to tread on TiVo's intellectual property. AT&T (NYSE: T ) agreed to cough up at least $215 million as part of a settlement and future licensing agreement with TiVo. DISH Network (Nasdaq: DISH ) had to pay more than twice that much to settle with TiVo last year.
In other words, Microsoft's new DVR app for gaming consoles may -- yes, may -- an opportunity for TiVo to reel in even more patent licensing revenue.
So Microsoft isn't likely gunning for TiVo in "shoot to kill" kind of way. May it be gunning for TiVo as an acquisition target?
There's no denying that patents are the new collectibles with tech companies, and now that Microsoft is beefing up its TV integration and archrival Apple is reportedly planning an even bigger play later this year, doesn't it make sense to own the DVR pioneer that has become the niche's gatekeeper given its valuable patents?
TiVo isn't looking to cash out. After several quarters of TiVo user defections the company posted its first quarter of net additions in four years back in November. However, if television is the game that the tech giants are playing, it probably pays to warm up to the company that owns the playbook.