Apple, Tivo Battle for PC TV Convergence

A few years ago there was a Gatorade commercial that pitted soccer star Mia Hamm against Michael Jordan. Back and forth the two competed in contests to win the title of “best athlete.” In the background, the song repeated “anything you can do I can do better.” Today, that commercial can be seen on YouTube. It’s ironic in a way because today YouTube has become equivalent to one of those athletic tests in a similar battle being fought by aspiring TV/PC Convergence devices like TiVo (TIVO) and Apple (AAPL) TV. Like Michael and Mia, the two keep leapfrogging past each other to show which can bring more features and internet sourced content to the TV screen.

Apple was the first to make YouTube a widescreen feature. They opened the door with the release of Apple TV last March and struck a deal in June. Those services were then upgraded further in January. Last week, TiVo made the announcement that they would offer similar. Then this week TiVo went one step further. They stepped forward to fulfill a promise made at the Consumer Electronics Show. Now, thanks to a software upgrade, approximately 800k of their 1.7m subscribers (who have the right broadband connection) will also be able to subscribe to CNET video clips, or other segments of Internet content. The company is even planning to incorporate RSS (Really Simple Syndication) feeds of content.

“TiVo’s strategy is to bridge the gap between web video and television and make as much content available as possible for our subscribers, “ Tara Maitra, the company’s VP of content services has said.

That’s a laudable goal in a promising, but crowded, young market. Other companies beyond Apple are hoping to offer similar. Sony (SNE), for example, has bundled Internet connectivity into some Bravia flat-screen TVs. Netflix (NFLX) has begun striking deals to put their on-demand functionality into electronics. Startups like Vudu and Building B are lining up to play too. But questions loom.

One of the big ones is whether any of this will be easy enough to use for the average consumer to accept and try. As a case in point, I regularly enjoy Netflix's on-demand video service. It’s great when there’s nothing on and I’d like to watch a movie. Unfortunately, I’m only able to enjoy it by connecting my PC to a TV (or on the computer directly). That’s inconvenient and not suited for the technology averse.

Similarly awkward restrictions will hinder part of TiVo’s new service too. In their offering, some of the content will be accessible directly through their TV sets. Other features, like the promised RSS component, aren’t going to be as user friendly (at least initially). Currently, it will require users first download to their PC. A home broadband connection will then transfer the files to the TiVo unit. (This PC tethered component is a backwards departure from prior TiVo straight-to-TV offerings including their Amazon (AMZN) Unbox partnership and the newly announced YouTube service).

Another question is how much Internet content consumers will want to watch in widescreen. As powerful a statistic as YouTube’s 55 million monthly viewers is, many of them are procrastinating at work, or at school. They are surfing the site because they happen to be in front of a computer. Take away that interface, plop them on the couch and give the same functionality: Will they tune in? I wonder.

In the end, TV and PC convergence is going to happen. But whichever service (and there will likely be more than one) that wins this horse race will lead because they found a suitable balance between convenience (e.g. “ease of use”) and content. So far, the bridge connecting the PC to TV is still under construction. Existing services remain novelties. They’re fun for the early adopters, they give media writers something to rant about and Wall Street likes the forward thinking…but today, they remain far from capturing an audience on Main Street.

Comments

[Stustanton]

It's the simplicity, stupid.

(sorry)

[Stustanton]

It's the simplicity, stupid.

(sorry)


(and that doesn't mean unresponsive)

[appeal2]

This is an interesting battle that is shaping up. I am not convinced that the real battle is between Tivo and Apple. While Apple has filed patents for a DVR, they still have not tried to market one. Creating a DVR is no big deal and they certainly have the technical expertise to create one and they have no doubt been able to do if for quite some time. So the question is, why haven't they done so. Simple reason--Patents. Tivo has them and Apple is scared to enter the market using a work around. They just saw EchoStar get banged for $128 million. At this point Apple could be risking billions to release a DVR. Without the ability to record television content, there really is no contest here. The Xbox 360 can download movies and content but doesn't have a TV tuner. MS Windows Media PC can record programs and can receive TV, but who really wants to go to their PC to play programs on their TV, only sophisticated users. And it might be infringing on Tivo's DVR software patents.

Perhaps the biggest challenge to Tivo is IP TV as presented by SBC. Their DVR can record content from multiple TV's in a household, thus eliminating the need for multiple Tivos. However, there are bandwith considerations and possible patent issues as well. The product is being perfected for an obvious national release. However, I have not heard of their convergence plans, such as showing Youtube video etc.

Finally there are many "convergence"... features that Tivo currently has that are poorly promoted, such as watching movie trailers and buying tickets, flickr review of pics, home movie broadcast, ability to watch video an listen to podcasts and numerous other features like playing your computer music library through your HD TV and home theatre. With all this going for it, Tivo just needs a few lucky breaks, like adoption of their interface by Comcast, Cox, Cablevision and Time. They've already got Comcast and Cox on board.