Search Results

Your search returned 10 results.

Xbox IPTV Announced at CES

I love it when a plan comes together.

I’m here in Vegas and Microsoft (MSFThas announced that the Xbox 360 will be morphed into a set-top box, delivering IPTV like functionality. This is something I predicted almost a year ago, based on the fact it made sense and Microsoft appeared to telegraph this.

Continue reading

Xbox Does IPTV – It’s Official

Microsoft (MSFT) just announced that on November 22nd the Xbox 360 will allow users to purchase and rent high definition television and movies. I made this call back in January of 2006, and repeatedly since then (search this site for Xbox IPTV).

Continue reading

Xbox 360 IPTV – DirecTV

xbox360logoWe feel the Microsoft (MSFT) Xbox 360 is destined to be a platform for delivering IPTV through Xbox Live or as a cable set top box sold directly to video providers.

Xbox Directv infoSome information appeared today that reinforces this trend. The March issue of The Official Xbox Magazine has a small blurb indicating that DirecTV (DTV) may provide downloadable HD content for viewing on the Xbox 360 platform. This follows on the heels of a partnership announced at CES in January. From Joystiq:

A scan of the March 2006 issue of Official Xbox Magazine reveals “that a DirecTV blade might be added to your Xbox 360 Dashboard to accompany the Xbox Live, Games, Media, and System blades. In that blade, you could download TV episodes in high definition, HD movies on demand, and standard-definition streaming DVR (i.e., TiVo) functions.”

It’s clear to us the Microsoft has extensive plans to grow the Xbox 360 platform horizontally to encompass the set top box business (starting with DirecTV), the PVR business (aka Tivo (TIVO) ), and eventually the handheld PMP business, potentially through a partner like HTC (2498.TW) and the use of Windows CE 5.0 and Windows Vista Sideshow functionality.

Note, I link to several other other opinion pieces I have written on the subject. Feel free to explore.

Microsoft Xbox 360 IPTV

Microsoft is clearly working on integrating IPTV into the Xbox.
Continue reading

Xbox Live – Operation Overlord

Xbox Live LogoMicrosoft (MSFT) has been taking flak for their several hundred million dollar investment in Xbox Live, a service that for $12 a month allows users of the console to gain access to sophisticated online gaming capabilities. There is also continued criticism of the building losses within the home entertainment division.

People seem to underestimate the level of investment needed to build a beachhead into the home and the potential return it might bring. Think of the preparations that went into Operation Overlord (D-Day June 6, 1944) – an equivalent effort will be necessary to make the digital home a reality.

Continue reading

Home PCs and Home Theater Don’t Mix

Anandtech has an absolutely horrifying review detailing the trials and tribulations of setting up a Windows Vista home theater PC (HTPC) with the first HD capable TV tuner from ATI (AMD). Even with the on-site assistance of Dell (DELL) and Time Warner Cable (TWC) (with promptness and technical expertise you or I could never hope to see) it took two days to get the Windows Vista PC, external HDTV cable tuner, and Time Warner Network integrated and up and running. The resulting experience was great, though most consumers would have never had the patience or technical fortitude to get it up and running. It makes one wonder why anyone would bother to do this at all.

Continue reading

Apple Overload and Zune Confusion

swingers.jpgI’m tired of reading about Apple’s ho-hum iTV announcement. And the Microsoft Zune strategy is incomprehensible. I don’t want the new PG-13 Microsoft that everyone likes. I want the old, evil, R-rated Microsoft you’re not sure you like.

Continue reading

DirecTV Can’t Kick the Tivo Habit

Tivo LogoTivo (TIVO) announced today that they have extended their agreement with DirecTV (DTV) for three years. In addition to this, both parties have agreed to not assert patent rights against each other. The previous agreement was due to expire in 2007.

The market appears to be viewing this positively. As investors in Tivo, we won’t complain, but fundamentally the two companies have not changed their relationship. DirecTV continues to develop and market their own set-top with homegrown DVR software and not market the Tivo version.

From the Reuters Article:

DirecTV is a top TiVo customer and the extension of the deal was initially greeted positively on Wall Street, where there had been concerns that DirecTV would transition their TiVo customers to its own service if an extension was not reached.

This is silly. Extending the agreement is much cheaper and easier than replacing 3 million set top boxes. The reality is DirecTV could have done nothing, and their customers with Tivo boxes would have continued to work. From the most recent Tivo 10-Q:

While DIRECTV would have the right to continue to service existing DIRECTV receivers with TiVo service without payment to us, it would not have the right to add new DIRECTV customers with TiVo service. And while TiVo would no longer be able to generate additional revenue from the then-current DIRECTV customers with TiVo service, we would have no further obligation to provide upgrades, fixes, new features, or software support.

Tivo currently gets about $1/month per box from DirectTV, or around $36MM a year in revenue. The announcement indicated that the new agreement has very similar pricing.

In short, we’re a little stumped why the market thinks this is such a great deal beyond protecting a recurring revenue stream. If DirecTV had agreed to use Tivo exclusively and stop in house development, that would be big news. All that has really happened is a further extension of the status quo. Regardless, if this brings more attention to Tivo and the strong value they provide, I’m OK with it.

The consensus opinion on Tivo is that they are in a death spiral, attacked by low-end commodity DVR’s from all sides. Their ‘only hope’ is to hit the litigation jackpot with Echostar and land a big wad of cash. We disagree vehemently with this opinion. Tivo is an exceptionally strong brand and commands incredible user loaylty. The Tivo software provides a significant differentiator in a future of commoditized video delivery by Cablecos and Telcos.

Our worst case scenario for Tivo assumes that they transform themselves into a software-as-a-service company, selling subscriptions to run on set-top-boxes from a multitude of hardware suppliers. A $12/year income stream from 20 million households (roughly 20% of US market) would yield $250M/year in revenue at substantially higher margins than the company enjoys now.

A more optimistic future would have Tivo turn their hardware devices into content delivery systems, utilizing the broadband connections available in homes to deliver content to the hard drive in each Tivo. Instead of recording a show from the tuner, content would be downloaded and stored on the Tivo. The new Series 3 Tivo will have HDTV capabilities and provides an ideal platform for storing and delivering content. DirecTV is working with Microsoft to potentially use the Xbox 360 as a content delivery platform, it’s unclear why they wouldn’t pursue a similar agreement with Tivo.

The problem with both scenarios is that they are totally incompatible business models. The first would require strong relationships with the content delivery folks, and an implicit agreement that the second model would not be implemented as a way to compete with the video delivery mechanisms of their customer. The second would require significant partnerships with content owners and distributors to provide them with an alternative way to distribute content. Disney’s recent decision to make shows via the web could just as easily be an agreement to make shows downloadable to Tivo, with an agreement from Tivo that the commercials could not be skipped.

Our frustration with Tivo, something I voiced in my post titled “Tivo Should be Sold” is that the company doesn’t appear to be pursuing either outcome. There has been little in the way of innovative hardware, software, or business models from Tivo in recent months that would indicate a move in either direction. The pursuit of the current business model of selling hardware DVR’s on retail shelves implies a future move to scenario two- the high risk/high reward strategy. However, the lack of any announced partnerships, as well as the vaporware Netflix agreement would indicate it isn’t being pursued aggressively enough.

If the company is not driven strongly in one of these two directions, it should be sold to a company that will. Some market and technical leadership needs to emerge from Tivo in the near term, because the market has priced in what we feel is a very reasonable 600M-800M acquisition value, based on continued pursuit of their original business model.

Tivo 6 Month Chart

Tivo Should Be Sold

Tivo LogoTivo (TIVO) announced their new partnership today. It’s called KidZone, essentially a TV Nanny. My previous prediction is looking a little silly though I wouldn’t rule out seeing more carrier partnership announcements. Thomas Hawke is excited because of the moral implications and I would agree the features make a great political statement. I’m not interested in political statements unless they enhance financial statements and it isn’t clear how this announcement (or other minor ones made in the past year) will do so.
Continue reading

iPod Competition – a Fighting Retreat

Apple Logo

The Stalwart follows up on the news that Dell (DELL) is abandoning the MP3 player market and makes a case for the mobile phone being the ‘next threat’ to Apple (AAPL). They make the observation that the fight for market share in dedicated MP3 players could be pyrrhic, and that the real battle is moving to other markets. We agree.

Continue reading