Cox to promote TiVo retail box

Will integrate VOD, offer free installation

Digital-video recorder (DVR) supplier TiVo, which has been working for
years to make its user interface and DVR software a key part of cable operators'
pay-TV services, has reached a significant deal with Atlanta-based Cox
Communications to fully support TiVo's new Premiere retail DVR.

As part of the deal, the third-largest cable operator will promote TiVo
Premiere to both existing and prospective subscribers, support Premiere as an
alternative set-top to traditional leased boxes and provide free installation
for Premiere boxes purchased by subscribers at Best Buy and other retail and
online outlets, including TiVo's own website. The basic TiVo Premiere
with 320 gigabytes of storage, enough for 45 hours of HD, retails for $299.99; the
Premiere XL with a terabyte of storage (150 hours of HD) sells for $499.99. Monthly
pricing for the TiVo service is $12.95.

More important, Cox will integrate its "Cox On DEMAND" VOD
service into the TiVo box, which already offers access to online movie services
from Amazon, Blockbuster and Netflix, and make its full VOD library available
to TiVo customers. The deal is another sign of cable's new willingness to
work with "connected devices" that seamlessly deliver Internet
video to living-room TVs.

Cox subscribers will need a CableCARD conditional access device for
access to VOD and other Cox premium services, which will be billed separately
from TiVo's program guide service (as they are today with existing
CableCard-enabled TiVo boxes). Cox will promote TiVo Premiere via its Website,
cross-channel advertising, and via direct marketing to its video and high-speed
internet subscribers.

TiVo has previously worked with Comcast and Cox to integrate its
program guide and software into traditional Motorola cable set-tops, with
limited success. Comcast moved ahead and actually deployed boxes running TiVo
service in its New England market, while Cox
put its plans on hold. Over the past year, Alviso, Calif.-based TiVo has taken
a new tack, reaching deals with operators RCN and Suddenlink to deploy its
Premiere box on a leased basis as their high-end DVR. Both RCN and Suddenlink
cited the ease of use of the TiVo program guide, as well as its ability to
easily access popular Web content like YouTube, as big drivers for their
decisions.

Cox, however, is the first operator to agree to fully support and
promote a retail TiVo box including the integration of its VOD service, says
TiVo SVP & GM of products and revenue Jeff Klugman. Klugman, who expects
the integration work on the product to be complete by early 2011, says the
combined offering should make a significant difference in the range of choice available
to a TV viewer.

"This is a sea change for the cable industry, to make VOD available
to a retail product," says Klugman. "There are assets in the cable
on-demand library that really round out the content library that is already available
to a TiVo subscriber. With this version with Cox, you really have a library
that you would not have anywhere else."

As Klugman explains, a Cox subscriber who is a fan of the NBC comedy "30
Rock" can watch the current season, either in linear fashion or on a
timeshifted basis. But they can't watch past seasons through Cox's
on-demand service. On the other hand, a Netflix streaming customer, such as a
TV viewer with a Roku set-top, can watch past seasons of "30 Rock"
in on-demand fashion but can't get the current season the same way.

Cox is also likely to use TiVo as a competitive differentiator in
markets where it is facing the stiffest competition from satellite and telco
operators. It should be particularly effective in pursuing consumers who had previously
used TiVo, says Klugman, such as DirecTV customers who previously used
DirecTV/TiVo DVRs.

For Cox, the partnership with TiVo is mainly about offering customers
more choice, says Steve Necessary, Cox VP of video strategy and product
management. He concedes that TiVo has developed a "passionate, devoted
following" for its service, which was the initial reason Cox tried to
integrate TiVo's program guide into traditional set-tops. While that
integration work was completed, Cox only rolled out the TiVo guide to a handful
of homes (mostly employees) before it decided to put the project on hold.

"With the passage of time, TiVo continued to evolve their user
interface, and what we had worked together to develop was actually a bit dated,"
explains Necessary. "That was a fact, and that fact led to lot of good
candid dialogue about what's the best way forward here. All things
considered, rather than continuing down that path of putting their UI [user
interface] on our box, we embarked down the path of expanding the Cox-delivered
content on their retail product."

Like RCN and Suddenlink, another driver for Cox to support Premiere was
the ability to easily offer broadband content to subscribers today. While Cox
has developed a powerful new program guide that provides more intuitive search
of linear, on-demand and timeshifted content, it doesn't yet provide
access to online video.

"TiVo Premiere does allow consumer to have access to broadband-delivered
video content," he says. "It's a unique way for us to jointly
assess the relative merits of broadband-delivered on-demand video, and the traditionally
delivered VOD content that we provide to all of our customers."

Necessary won't give a prospective date for rolling out the Cox
On Demand service on TiVo, as he says that Cox needs to do technical
integration, validation and testing before deploying it to initial markets. But
he notes that much of the heavy lifting has already been done by TiVo and RCN,
which uses the same video-on-demand platform from SeaChange that Cox uses.

"We have high confidence that this will work just fine
technically," says Necessary. "But we don't know what we don't
know."