Tivo Under Pressure as High Court Allows Network DVR

TiVo (TIVO) shares are coming under pressure following Monday’s Supreme Court ruling that will allow Cablevision (CVC) and other cable operators to offer network DVR service, allowing consumers to record programs on centralized servers, rather than on set-top box hard drives.

Tony Wible, an analyst with Janney Montgomery Scott, writes in a research note that the potential impact on TiVo from the ruling on the company is not all clear.

• Moving storage off the set-top box and into the cloud will make it far cheaper for cable companies to offer DVR service - consumers would in theory be able to record shows with any digital set-top box. TiVo has cut licensing deals for its user interface with a number of cable companies, including Comcast and Cox; the ruling has the potential to seriously increase the potential target audience.
• There’s also the possibility that TiVo will attempt to enforce its DVR patents on the cable companies.
• Another potential issue (which Wible does not address) is that this has potential to trigger much lower pricing for DVR service: the cable companies could give back some of the costs they’ll save on lower cost set-top boxes in the form of reduced pricing for the service. That might make consumers less inclined to pay the extra costs for a TiVo box.

TIVO Monday is down 49 cents, or 4.4%, to $10.54.

Original post