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Might Tivo (TIVO) one day be embedded as a piece of software in your television set? The company is rapidly moving in that direction.

The DVR pioneer's recent linkup with Comcast Cable (CMCSA) is putting  software in New Englanders' cable boxes that would enable Tivo's fast-forwarding and view-later capabilities to work without having to add a separate Tivo box. If that experiment works, a national rollout could follow.

Tivo meantime has struck a deal with Mitsubishi (OTCPK:MSBHY) to bundle its own DVR boxes with Mitsubishi TVs. And Comcast has announced a plan with Sony (SNE) to try doing away with physical set-top boxes and include virtual, software-based cable boxes inside the TV itself. There's no technical reason why Tivo couldn't eventually be embedded in future high-definition digital television sets.

Tivo CEO Tom Rogers, speaking at the All Things D industry conference last week, said Tivo no longer is an industry renegade, but is weaving its way "into the fabric of the media industry." It helps, he said, that  rather than fighting DVRs, media execs have concluded that "fast forwarding of commercials is here to stay," and are coming up with more compelling, more finely tailored advertisements that consumers might actually choose to watch.

Programmers and ad agencies are working more closely with Tivo, which now is offering real-time feedback on TV watchers' viewing habits.

Recently, Tivo announced higher profits, but largely due to cost cuts, not new subscribers. In fact, subscribers have fallen because Directv (DTV) has stopped markeing Tivo in favor of its own DVR technology.

Tivo has been winning court victories in a patent lawsuit against Dish Network and Echostar (DISH) over DVR technology. Today, the satellite providers counter-sued Tivo. The outcome of this dispute will strongly affect how quickly and broadly Tivo technology will spread.

Source: Will TiVo Become Software Inside Your TV?