You've seen countless knockoffs of TiVo's (NASDAQ:TIVO) pioneering digital video recorder over the years, but now the competition is coming from a brand that you may actually recognize. Sony (NYSE:SNE) introduced PlayTV yesterday, an add-on to the PlayStation 3 video game console that will allow players to watch -- and record -- digital television.

TiVo doesn't need to break into a sweat just yet, though. Sony's plan, for now, is to roll out PlayTV only in Europe, and that won't be until early next year. And besides, as any diehard TiVo fan will tell you, TiVo is about far more than simply recording and playing back television shows.

But since the primary function of a DVR remains the time-shifting ability to stream through earlier broadcasts at your beck and call, avoiding TiVo's monthly subscription fees is often reason enough for many consumers to settle for a cheaper solution that lacks many of TiVo's frills.

TiVo, in fact, commands just a thin slice of the actual market. Even though there are 4.3 million active TiVo subscribers at the moment, all but 1.7 million of those are part of an old DirecTV (NYSE:DTV) partnership. The good thing is that those 1.7 million are loyal, and the number is actually growing.

If PlayTV eventually makes a stateside appearance, it would be a bigger threat to the cheaper wannabes than to the real deal. However, when you begin to see what Sony and Microsoft (NASDAQ:MSFT) are doing in the realm of video delivery and consumption, it's hard not to be a little worried as you peek in the rearview mirror.

Thumbs-up for the console makers
PlayTV is an intriguing product. It can store recorded shows on your PS3, but it can also transfer them over to your handheld PlayStation Portable to watch on the road. Don't have a PS3? Didn't even know that there is a portable game player that isn't the handiwork of Nintendo (OTC BB: NTDOY.PK)? You're not alone. Sony may have ruled the video game market with its PS2, but it's finding the migration process to the PS3 to be slow-footed and difficult. The PSP is doing better, but it's still a distant rival to the runaway success of Nintendo's DS Lite.

Recent price cuts on both the PSP and PS3 hardware domestically should help move more units, but a killer app is always the better business strategy than a margin-obliterating price cut. In that sense, Sony would be nuts not to find a way to get PlayTV launched domestically, sooner rather than later.

Over in the Xbox camp, Microsoft is way ahead of Sony in transforming its Xbox 360 into a home theater appliance. Through its broadband-enabled Xbox Live marketplace, Xbox is selling television shows and full-length movies. The PS3 and Xbox 360 come with generous hard drives for a reason, though that kind of storage capacity is modest relative to higher-end DVR solutions.

Still, the trend is undeniable. Just as PS3s can play Blu-ray discs and Microsoft sells an HD-DVD add-on for Xbox 360 systems, video game makers want a bigger piece of the home entertainment market.

Nintendo's Wii may be the lone exception. The system won't even play conventional DVDs. However, Nintendo doesn't seem to be smarting over the lack of convergence. It is the next-generation platform of choice these days, even though DVD playback is likely in the future.

The game is on
Ask a TiVo shareholder who his company's biggest competitors are: A popular response would be the satellite television companies and cable providers who market their own generic DVR solutions to subscribers -- even though some license TiVo's technology to stay clean on the patent-infringement front. Major networks would also be significant competitors, since they move a lot of their primetime content online for viewers to stream on their terms.

Some would also argue that the growth of pay-per-view choices are another way that digital cable is eating into the ranks of potential TiVo subscribers.

Few would bring up the video game hardware companies as major threats, but they clearly bear watching. When you get down to it, the TiVo, Xbox 360, and PS3 are just boxes hooked up to your television, and they are all competing for the same shelf space.

That's important. I would argue that one of the few reasons why the Apple TV hasn't taken off -- a rare miss for Apple (NASDAQ:AAPL) these days -- is that consumers still crave streamlined simplicity in their video consumption. So how can one, then, not view the Xbox 360 and PS3 as serious challenges to TiVo's growth? They are boxes with hard drives and Wi-Fi connectivity, and they're already attached to televisions as appliances that can play movies when they're not in gaming mode.

PS3 is taking the next logical evolutionary step with PlayTV. TiVo is blessed with patents, personality, and partnerships. Unless I miss my mark, it's going to need to rely on all of those things to keep growing aggressively in the future.  

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Longtime Fool contributor Rick Munarriz owns shares in TiVo. Now he's just waiting for the TiVo gaming console! Just kidding, of course. Then again, maybe not. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.