TiVo Lost in Translation

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Is the country's most popular verb in home entertainment about to become an ambitious export, too? A report over the weekend in Japan's Nihon Keizai Shimbun indicated that TiVo (Nasdaq: TIVO) is looking to enter the Japanese market as early as next year, and that's news that will get investors excited.

TiVo has endured a troubling spell during which the company suffered through an executive shuffle and lost its partnership with DirecTV (NYSE: DTV) that was accounting for the bulk of its 3 million subscribers. And now, the good news has begun trickling in. The Motley Fool Stock Advisor recommendation has announced that it will be profitable by the final quarter of the fiscal year. It then saw its stock shoot up by 75% last Tuesday, when it announced a deal with Comcast (Nasdaq: CMCSA) that will have the cable giant offer its 20 million-plus subscribers a TiVo-branded software service.

Now the scuttlebutt is that Japan is waiting in the wings come 2006. Tivo's Japanese site is up and running, but there's not much there right now -- and its copyright is dated 2003. But more importantly, investors need to be realistic. Japan is the home of consumer electronics. From Sony (NYSE: SNE) to Matsushita (NYSE: MC) to countless other electronics specialists, TiVo will clearly have an uphill battle in Japan. Ask yourself why Starbucks (Nasdaq: SBUX) has yet to make a definitive move into Italy, and you can see the problem with TiVo's geographical expansion.

Stateside, TiVo commands just one of every three digital video recorders. However, TiVo's brand -- and its patent-rich software applications -- shouldn't be dismissed, either. It's why the company struck up the deal with Comcast last week. That's why it's encouraging to see that the story indicates that TiVo isn't likely to go it alone in the fiercely competitive country, but rather team up with local companies. That is TiVo's best shot. Exporting the brand -- not as a box maker but as a software licensing specialist -- is TiVo's brilliant new strategy.

That's the TiVo that the rest of the world is about to see -- or so investors hope.

Some recent TiVo tidbits:

• The $99 price point should be enough to win over new subscribers.
• Yet the new software licensing deal with Comcast appears to be the best move for TiVo.
• Most of the Stock Advisor recommendations have performed far better than this one.
• Share your thoughts or pilfer those of others in our TiVo discussion board.

Longtime Fool contributor Rick Munarriz does have a TiVo, but he does not own shares in the company. The Fool has a disclosure policy. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.