Friday, May 30, 2008

John Dvorak's Second Opinion: Why Disney should buy TiVo

From Market Watch:

"...But TiVo has become a verb and holds all the best patents on this sort of technology -- and it is addictive.
More importantly it can be effortlessly turned into a conduit for the next generation of TV -- IPTV. This is television delivered via an IP connection either over the Internet or over a private closed IP network.
Everyone knows that eventually IPTV will become the dominant form of TV show distribution. Just as news distribution is being converted online because you save money on paper, ink, printing presses and delivery trucks, a similar change will take place in broadcast media.
With online broadcasting you don't need expensive transmitters, antennas, licensed personnel and government licenses to operate. IPTV makes things cheaper.
That said, the form that IPTV will eventually take is not certain. The Web made the online newspaper popular since the web was a perfect platform for print-style content. This is not the same for video content.
Video content on the web is a novelty, a diversion. There has to be some link to the TV set in the den for the IPTV initiative to ever take off. This means some sort of set top box or a direct connection between the TV and the Internet.
TiVo is sitting in the sweet spot. And when I see a company like Disney playing around with a company like TiVo I begin to wonder if Disney is getting its feet wet in advance of a buyout deal. With a market cap just under a billion it might be too much to swallow, but it would give Disney a technology it could use and leverage.
While some observers in the movie business see Disney as moving away from the content creation business insofar as movies are concerned, it seems to be solidly into TV content which is perfect for TiVo. And it does have movies that need distribution.
Besides giving the company more control over content by controlling such a device it might find it a good vehicle for delivering targeted advertising to the viewers. This has been the holy grail of broadcast advertising. The possibilities are endless if you can control a box like this and make it even more popular.... "

Tivo has superior controls and easily links to cable and online content. It intuitively saves programming of interest and may be able to truly target it saudience with ad messages they want to see. A Disney Tivo partnership seems to have a lot of great potential.