The future of entertainment is digital, and TiVo (Nasdaq: TIVO) has a significant role to play in it -- at least in 2011.

This year was by turns promising and brutal for the DVR innovator. A major court victory in March sent shares soaring, only to fall back to earth again as legal opponents DISH Network (Nasdaq: DISH) and EchoStar (Nasdaq: SATS) scored a reversal two months later. A much-ballyhooed refresh of the high-end TiVo boxes failed to impress pundit Walt Mossberg or fellow Fool Rick Munarriz, and the stock has languished in single-digit territory for much of 2010.

Will 2011 be any different?

Given that I had put some of my own cash into the stock in November, you might think I'd say "No way." But my investment thesis does not surmise a clear path to trouble-free skies.

Instead, I'm banking on another turbulent year or two. The patent-pounding battles against the cable and satellite industries -- as embodied by DISH and EchoStar -- have been going on for, gosh, six years now and may shuffle along for a long time yet. Supposedly final court orders have been overturned or challenged over and over, delaying the final outcome by years.

The thing is that TiVo has won so many of the skirmishes that I don't see how the company could lose the war in the end. At some point, DISH and EchoStar will probably have to cough up the cash for years of fines, late fees, and cumulative damages. The challenges will run out.

TiVo's stock is currently trading in a low range because the latest chapter in the legal saga was a temporary defeat. When that particular delaying action is defeated (as I believe it will be), TiVo will jump again and give us bottom-feeders a nice return on our investments.

This will probably happen in 2011, but I'm willing to sit on my shares until 2012 if need be because the payoff will be huge. Armed with an undisputable court record, TiVo will go looking for license payments from every cable and satellite operator under the sun: Pay up or remove your DVR services along with millions of subscribers! TiVo will become a licensor of DVR technologies first and an innovator second.

And that's when I'll sell my shares, collect the winnings, and look for the next next big thing.

Peering even further into the future is a gloomy exercise for TiVo, you see. Netflix (Nasdaq: NFLX) is tearing up the charts with its digital movie streams, giving us a first taste of what the future will look like. TiVo's DVR technology requires you to record first and watch later, possibly missing some shows you didn't know you wanted to see. On-demand services like what Netflix is doing cut out the middle man and take the next logical step: Watch anything, anytime.

TiVo will become obsolete, but it will get its glory days first, and 2011 looks like exactly the right time to own the stock.

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Fool contributor Anders Bylund owns shares in TiVo and Netflix but holds no other position in any of the companies discussed here. Netflix is a Motley Fool Stock Advisor recommendation. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. You can check out Anders' holdings and a concise bio if you like, and The Motley Fool is investors writing for investors.