Web Video, TiVo Style

A few months back, it seemed that TiVo (NASDAQ:TIVO) had stalled out when it came to new developments and innovations. Now it's getting back in the game. Just a few days after the launch of its targeted ad product, it's now announcing a deal with Brightcove, which will allow subscribers to access Web video through their TiVo boxes.

The idea that TiVo might offer this type of content is hardly new. Way back in 2004, many investors had high hopes that TiVo and Netflix (NASDAQ:NFLX) would offer movies via broadband connections through the TiVo box. That didn't come to pass, but TiVo's most recent development finally connects TV and Internet-based video content.

Possibly as early as June, Motley Fool Stock Advisor pick TiVo will offer video content from Brightcove, an Internet TV service that enables content providers to distribute video over the Internet. Brightcove has a stable of content partners already, including the New York Times, Discovery Communications, National Lampoon, Viacom's (NYSE:VIA) MTV, and Reuters. It's also got several well-known investors, such as Time Warner's (NYSE:TWX) AOL and IAC/InterActiveCorp (NASDAQ:IACI). (IAC chief Barry Diller is on Brightcove's board of directors.)

It's worthwhile to note that people who get TiVo through DirecTV (NYSE:DTV) won't be eligible to use this service, and those subscribers make up a very large portion of TiVo's subscriber base.

When I wrote about TiVo's new ad initiative a couple days ago, one reader emailed me that an element missing from most news coverage was the advent of Internet TV. I'll bet he's feeling pretty prescient now.

To survive, TiVo will have to differentiate itself from rivals, and competition is emerging from many corners. Yahoo! (NASDAQ:YHOO) recently announced free software that people could use to allow their PCs to act like DVRs. However, Yahoo!'s service requires a TV tuner card in each user's PC, plus cables to connect those PCs to their TVs. I'd say TiVo's service sounds a lot easier for less technically inclined consumers.

TiVo is certainly making up for lost time, and I can see why its sharehodlers might feel heartened these days. Nonetheless, the company must still prove that it can achieve profitability and fend off rivals. For now, at least it's showing a lot more competitive spark than it was a few months ago.

TiVo, Netflix, and Time Warner are all Motley Fool Stock Advisor recommendations. To find out the most recent stocks that David and Tom Gardner have recommended, click here for a 30-day free trial.

Alyce Lomax does not own shares of any of the companies mentioned.