TiVo (NASDAQ:TIVO) and the CableCard consortium face a threat from Switched Digital Video [SDV] offered by cable operators, according to MultiChannel News. SDV sends individual channel streams to viewers upon request rather than broadcasting channels to all users. This requires two-way communication and is theoretically more efficient. The industry has recently agreed upon the TiVo-friendly CableCard standard, which is a one-way technology and cannot support SDV--but the cable operators seem intent on going ahead with SDV.
All cable operators are required to begin distributing CableCard-ready set top boxes beginning July 1. These boxes will have a slot available to insert a CableCard, which will enable channel selection and scrambling technology. The consortium is intended to promote the compatibility of alternative set-top boxes, making consumer options more widespread. TIVO has embraced the CableCard concept and has already launched the Series 3, a CableCard based HD-DVR.
TIVO may have the FCC on their side. Representative Anna Eshoo (D-Ca) said:
I am concerned that despite the implementation of this mandate, many cable operators will either hobble or render competitive set-top boxes unusable by deploying new channel switching technology that won't work with other boxes.
While the cable operators have expressed a desire to work with TIVO to create a two-way solution for CableCards, they may drag their feet. This would put TiVo even more behind the 8-ball.