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TiVo struggles to broaden its horizons

Company scrambles to redefine its business as it courts cable companies, adds new features like KidZone. Images: TiVo's KidZone

NEW YORK--TiVo is jumping on the parental control bandwagon.

On Thursday, the company, well-known for its digital video recorder, unveiled at a press conference here a service called , which allows parents to look for shows appropriate for their children and separate that content from other shows recorded for adults.

The KidZone announcement comes as TiVo is being forced to redefine itself in the face of tough competition from makers of generic digital video recorders that have developed products similar to TiVo's own. Makers of traditional cable set-top boxes, such as Scientific-Atlanta--now a part of Cisco Systems--and Motorola, also have added digital recording capabilities to their boxes. To make matters worse, TiVo has lost its largest distribution partner, DirecTV, a relationship that accounts for about two-thirds of TiVo's total 4 million subscribers.

TiVo's KidZone

"The company has an awful lot of challenges," said Mark Harding, senior digital media analyst for Maxim Group. "It's pretty clear that their strategy to go to market with their own box and service isn't working. They need to solidify a strategy and commit to it."

TiVo is trying to do just that. The KidZone service is just one of many new features the company has introduced recently to differentiate its product from the rest of the pack. It has also partnered with companies like Apple Computer and Sony to extend its service to mobile devices. In addition, the company has been kicking around new ideas for pricing. During the KidZone press event, CEO Tom Rogers confirmed that TiVo is considering offering its DVR box for free to customers who pay a higher monthly fee for the service.

"We are very much about offering customers choice," he said. "And we are also focused on differentiating TiVo from other DVRs."

As the DirecTV deal ends, TiVo is looking to new distribution channels--mainly cable operators. Last year, it announced a deal to . The technology to do this, which is still being developed, will be available by the end of 2006, Rogers said.

But some analysts on Wall Street still worry about TiVo's prospects. Some have even speculated that the company might consider selling itself.

"Going after the cable market is definitely a step in the right direction," said Murray Arenson, a senior equity analyst at Ferris Baker Watts. "But those relationships can be tricky, and it's hard to know to what extent Comcast will allow TiVo the freedom to differentiate itself."

One thing is clear: TiVo has developed high-quality software and a user interface that could be used in emerging technologies such as IPTV (Internet Protocol television), Rogers said. He says he believes that TiVo's technology could help organize and navigate programming that might some day be available on TV sets via the Internet. But the company will also face stiff competition in this area, especially from heavyweights such as Microsoft, which is already working on IPTV solutions.

"We think that when people really start using IPTV there will be a need for a solution that can organize everything on the TV," Rogers said. "That's something we already do well."

As for TiVo's biggest potential competitor in this market, Microsoft, Rogers didn't seem too worried.

"I've been underwhelmed in terms of the user interface that I've seen from Microsoft," he said.