America Online today forged a tighter relationship with TiVo, a company whose technology lets TV viewers customize their program
lineups, in an effort to boost features for its upcoming interactive TV services.
Under a three-year agreement, TiVo's technology features will be included
in AOLTV, the online giant's foray into interactive television.
In addition, AOL will also invest up to $200 million in TiVo.
News of AOL's investment sent TiVo shares through the roof. By the close of regular trading, TiVo was up $12.23, or 57 percent, to $33.80.
Today's announcement is an extension of a similar deal inked in August last year. At
that time, the companies agreed to combine AOLTV with TiVo's
technology. AOL also made an initial investment in TiVo for an undisclosed
The agreement comes close to AOL's planned unveiling of AOLTV, which is
slated for release this summer. AOLTV is the online giant's effort to
extend its interactive services, such as Internet access, email and
instant messaging, to the TV screen. It will come in the form of
a set-top box manufactured by Philips Electronics and also a product shipped with
Hughes Electronics' DirecTV.
"They're trying to extend their brand and franchise and audience in the
online world to other devices at home," said Jim Penhune, an analyst at market research firm The Yankee Group. "This is not all that different with
what they want to do with wireless devices or standalone appliances."
VP of Business Development, TiVo
Discussing the benefits of the partnership.
AOLTV is part of the company's "AOL Anywhere" strategy--an initiative to
spread its services across a range of non-PC Internet devices such as cell
phones, pagers, handheld computers and Web appliances. AOL has already
taken steps into wireless devices and has signed a series of deals
to spread its
popular AOL Instant Messenger into these services.
AOL has a $1.5
billion investment in Hughes, a division of General Motors,
and has already begun testing a high-speed satellite service with the
company's DirecPC service.
With TiVo, AOL gets a much-talked-about technology under its belt.
TiVo is a TV set-top box that records programs using a hard disk
instead of a traditional videocassette. The technology allows viewers to not
only record their favorite shows but also to skip commercials, shuffle their
programming lineups, and repeat missed parts of shows.
TiVo has garnered considerable attention from investors. Along with
AOL, TiVo's list of high-profile backers includes Microsoft co-founder Paul
Allen, NBC, CBS, Philips, Walt Disney and Cox Communications.
TiVo's primary competitor, ReplayTV, has financial backing from Motorola,
Sega, Matsushita, Excite@Home, Scientific-Atlanta, News Corp., Rogers
Communications and Universal Music Group, among others.
AOLTV boxes will begin incorporating TiVo features in early 2001, the