The TiVo service enables consumers to shift their favorite shows to specific hours and create a customized television lineup for viewing at any time.
The deal is significant for AOL in its push to move beyond personal computers into television sets and portable devices--known as its "AOL Anywhere" initiative. As consumers begin to use means other than traditional desktop computers to access the Web, AOL needs to be available to them on other devices to stay on top of the consumer Net access market.
But competition also remains stiff on the desktop, where AOL is fighting on a number of fronts. It is locked in a battle with AT&T and others over access to cable lines so it can offer high-speed service via cable. To cover its bases, AOL has made deals with a number of Baby Bells to offer access via digital subscriber lines. It also invested $1.5 billion in Hughes Electronics, parent company of satellite TV and Internet services DirecTV and DirecPC, to keep from getting pushed aside in the high-speed access market.
As part of today's agreement, AOL and TiVo will collaborate to bring consumers interactive events by combining TiVo's personal television service with AOL TV's interactive television offerings. In addition, future versions of TiVo's personal video receiver are expected to provide consumers access to the new services, the companies said.
Instead of a traditional videocassette, TiVo's TV set-top recording device uses a large hard disk drive like the one found in a desktop computer. Coupled with an easy-to-use electronic programming guide and pared-down online service, these devices can be easily programmed to record shows in advance, the company says. In addition, these devices can pause and resume shows on the fly--and allow users to skip over ads.
With its investment announced today, AOL joins a growing list of high-profile TiVo backers, including Microsoft cofounder Paul Allen, NBC, CBS, Philips Electronics, Disney, and Cox Communications.
Tivo isn't the only on-demand TV company getting an infusion of cash. Tommorrow, ReplayTV is expected to announce that it has gained investments from heavyweights such as Disney, Showtime, Time Warner, and ten others.
"AOL has always focused on making the online experience a key part of our members' lives. As consumers want to extend that interactive experience to devices beyond the PC, we see TiVo as a great way to help us deliver our hallmark, ease of use, and convenience to the television," Bob Pittman, president and chief operating officer of America Online, said in a statement.
AOL TV will offer members AOL interactive service on television. It is designed to include key pieces of AOL's current features as well as new ones designed to augment the television experience, the company said.
Along with the Hughes Electronics investment, AOL recently announced agreements with Hughes Network Systems, Philips Electronics, and Liberate Technologies (formerly Network Computer), which also are key to the development of AOL TV.