TiVo (Nasdaq: TIVO ) excels at time-shifting. The DVR pioneer has been giving couch potatoes the ability to pause live television, rewind, and fly through commercials for years now. But today, I'm going where no TiVo box has gone before: to the future.
The convergence of home theater with digital delivery was both cruel and kind to TiVo in the years leading up to 2012. Licensing its patents generated attractive gobs of high-margin royalties, but a lot of TiVo's functionality has now been replaced by advanced appliances.
From your early-2009 perspective, TiVo stands out from the crowd by offering access to Netflix (Nasdaq: NFLX ) video streaming, RealNetworks (Nasdaq: RNWK ) music subscriptions, and the latest clips on Google's (Nasdaq: GOOG ) YouTube. Well, most 2012 televisions come with Web-connectivity and basic functionality built in. In other words, DVRs are gradually becoming redundant.
It also didn't help TiVo that most of the major networks moved to on-demand programming. Broadcasters still have regular show calendars, but primetime is really a state of mind these days. More and more TV buffs are dictating when primetime starts for them, as long as it's after the original airdate. Yes, that's costly for the networks -- and a boom for content-delivery networks like Akamai (Nasdaq: AKAM ) -- but the media companies make up for it by serving up perfectly-targeted ads to individual viewers. (The ads are mostly served by Google, if you need to ask.)
All of these living-room conveniences would seem to doom TiVo -- if necessity hadn't already forced the company to evolve.
TiVo's survival didn't always seem certain. As 2009 got under way, investors assumed that licensing deals through companies like cable provider Comcast (Nasdaq: CMCSA ) and satellite television leader DirecTV (NYSE: DTV ) would save the day, offsetting losses on the subsidized hardware side. What few realized in 2009 was that the cable and satellite TV industries were in for a world of hurt.
As networks reach out directly to the end users and penny-pinching consumers look to shave superfluous expenses, what do you think the future of premium television subscriptions will look like? With most of the country's population covered by free -- or dirt cheap -- Internet access by 2012, many people are ditching their cable and satellite television plans altogether.
However, TiVo didn't shrink in relevance. It simply learned to multitask. TiVo's ability to overlay affiliate ads -- from pizza delivery to featured product sales -- onto existing programming didn't seem like a big deal in 2008. But by 2010, it fueled an ultimately unsuccessful buyout attempt of TiVo by Google.
The attention boosted TiVo's stature, even if Google went on to develop in-house workarounds to mimic TiVo's ad-serving enhancements.
Back to the future
The moral of the story of the story is simple: Having a pause button doesn't mean you can afford to stand still. TiVo may have faded from the hardware end as technological trends shifted away from standalone DVR boxes, but the TiVo brand, patents, and innovations continue to bear fruit in 2012.
The company wears many hats, but it's mostly a tollbooth collector in 2012. Whenever someone orders a pizza or arranges to have a network send an entire series of its shows at regular intervals, TiVo is there to pocket some change as the result of its earlier brainpower.
TiVo isn't necessarily more relevant in 2012 than it was in 2008, but at least it's alive -- and consistently profitable.
In the end, that's what truly matters, whenever your time-shifting happens to take you.
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