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TiVo devices take Britain by storm

The digital video recorder maker announces a deal with British Sky Broadcasting Group, bringing the recording technology to the United Kingdom for the first time.

Digital video recorder maker TiVo today announced a deal with British Sky Broadcasting Group to bring the firm's recording technology to the United Kingdom for the first time.

Digital video recorders (DVRs) store information in digital form on hard drives, rather than on magnetic tape, allowing viewers added features such as instant replay, video pause and slow-motion playback, in addition to traditional VCR features.

Today's announcement marks TiVo's first international deal, the company said.

Many analysts see these types of devices, along with DVD and television set-top boxes, as the future of home entertainment. Digital video recording technology is already being built into Internet set-top boxes, specifically Microsoft's WebTV.

The market for information appliances in general, which includes DVRs from TiVo and rival Replay, as well as handheld computers and gaming consoles, is set to grow from 11 million units shipped in 1999 to 89 million units in 2004, according to market research firm International Data Corp.

The market, driven primarily by television-based technology, will grow from revenues of $2.4 billion last year to $17.8 billion in 2004, according to IDC.

Internet service giant America Online is set to unveil its own service, AOL TV, later this year, a move that is expected to bring television-based technology to the fore of the consumer marketplace. AOL is partnering with Liberate Technologies and TiVo as it sets itself to compete against Microsoft.

With the BSkyB deal, TiVo has aligned itself with a fast growing satellite service provider which now counts around 2.5 million subscribers.

"BSkyB has a powerful brand, significant marketing and distribution muscle, and the right demographics" for our audience, said Morgan Guenther, vice president of business development at TiVo. TiVo could well use that muscle: In its most recent earnings report, it said it sold 26,000 receivers total during its fourth quarter of fiscal 1999. Analysts have been predicting that some 10 million of these devices would be sold by 2004, so companies have some catching up to do.

A British version of the TiVo box, co-branded with Sky, will be available in retail stores in the U.K. by this fall, according to the companies. Designed to work with most televisions, the device will also include some features which can only be used with the Sky digital television service. In addition to the typical TiVo functionality, the British version will include some special features and interactive programming, the companies said.

While TiVo has a two-year exclusive relationship to distribute stand-alone DVRs with BskyB, the company hasn't yet inked a deal to incorporate TiVo's technology directly into satellite set-tops. Those set-tops are primarily made by Pace Micro and Sony.

Guenther said the company is looking to get its technology included in the set-tops, following a similar strategy it is pursuing in the U.S. market. It isn't clear yet how well the company will fare in that regard, though.

Rupert Murdoch's News Corp., which has a 40 percent stake in BskyB, has a subsidiary called NDS that is developing software, called XTV, to be incorporated into Pace Micro set-tops that allow for essentially the same tasks as TiVo and Replay's service. The company is mainly known for providing security technology to companies such as DirecTV and Sky Broadcasting in the United Kingdom.