TiVo (NASDAQ:TIVO) can't get out of the digital TV recorder business fast enough. But with Amazon.com (NASDAQ:AMZN) now reportedly developing its own DVR product to record live TV programming, TiVo's chances of finding an interested buyer have probably decreased dramatically.
Looking for a way out
TiVo announced earlier this year that it will no longer make its set-top boxes, opting instead to contract out their manufacture to an unnamed third party. While it would still sell the TiVo-branded boxes on its website, and they would be available for purchase at Amazon and Best Buy, then-president and CEO Enrique Rodriguez said TiVo was exiting the hardware business and would instead act as a distribution channel. He also said TiVo was undertaking a strategic review with an eye toward selling the company.
Rodriguez, however, didn't wait around to find out how the review would go, as he made his own exit in July. He jumped ship to cable giant Liberty Global to serve as its chief technology officer, just eight months after having accepted the CEO job at TiVo. Board member Raghu Rau was appointed interim president and CEO.
When TiVo announced its second-quarter earnings last month, it also said there might be buyers interested in its products, intellectual-property portfolio, and 22 million subscribers. But that was before Bloomberg said Amazon.com was diving into the DVR business.
A frank discussion
Code-named "Frank," the device would let TV viewers use the same technology that lets them connect to their Fire TV boxes through their Echo speakers and record live TV, something Amazon's existing boxes can't do.
The DVRs would have physical storage and would be able to stream the video to a smartphone, laptop, tablet, or smart TV to watch at a later time, just like TiVo DVRs and the Slingboxes made by DISH Networks' (NASDAQ:DISH) Sling TV do. The difference is that Frank will connect to the device by a user's Wi-Fi signal, rather than than being plugged directly into the TV, making it more similar to the devices from TabloTV.
The Bloomberg report didn't say whether the DVR capabilities would apply to content streamed from its Amazon Channels platform or would work only with broadcast channels, but Amazon is clearly angling to own your living room through connected devices such as its Fire TVs, TV boxes, and TV sticks.
By horizontally and vertically controlling the entire TV process, Amazon.com can learn important information about your viewing habits and use the data to better market to you, in terms of both programming as well as through its retail platform. It's creating a complex ecosystem with strands that weave themselves into the fabric of your day and create a retail experience with numerous touchpoints to sell you something.
Consumers don't have to leave their chair, let alone their home, to order products, food, services, or entertainment using Amazon's extensive catalog of technologies and services, and have it brought to their door or into their living rooms.
A tough time for TiVo
A DVR is but a small cog in that enormous wheel, but keeping you from wandering beyond the comfort of its boundaries means Amazon.com can further dominate a market. That also has to be worrisome for TiVo, which has long survived on the strength of its patents, having used them in the past to wrangle licensing deals out of tech and cable giants that tried to move in on its turf.
Now as TiVo tries to find someone to buy the company, it needs to persuade them that the value of its IP portfolio will be as strong as ever, as they will also have to take on the commerce giant at the same time.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Rich Duprey has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon. The Motley Fool has a disclosure policy.