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AOL, TiVo ink deal for interactive TV

The online giant tightens its relationship with the company whose technology lets TV viewers customize their program lineups, in an effort to boost features for its upcoming interactive TV services.

Jim Hu
2 min read
America Online today forged a tighter relationship with TiVo, a company whose technology lets TV viewers customize their programlineups, in an effort to boost features for its upcoming interactive TV services.

Under a three-year agreement, TiVo's technology features will be includedin 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. Atthat time, the companies agreed to combine AOLTV with TiVo'stechnology. AOL also made an initial investment in TiVo for an undisclosedamount.

The agreement comes close to AOL's planned unveiling of AOLTV, which isslated for release this summer. AOLTV is the online giant's effort toextend its interactive services, such as Internet access, email andinstant messaging, to the TV screen. It will come in the form ofa set-top box manufactured by Philips Electronics and also a product shipped withHughes 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 withwhat they want to do with wireless devices or standalone appliances."


Morgan Guenther
VP of Business Development, TiVo 
Discussing the benefits of the partnership.
AOLTV is part of the company's "AOL Anywhere" strategy--an initiative tospread its services across a range of non-PC Internet devices such as cellphones, pagers, handheld computers and Web appliances. AOL has alreadytaken steps into wireless devices and has signed a series of deals to spread itspopular AOL Instant Messenger into these services.

AOL has a $1.5billion investment in Hughes, a division of General Motors,and has already begun testing a high-speed satellite service with thecompany'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 diskinstead of a traditional videocassette. The technology allows viewers to notonly record their favorite shows but also to skip commercials, shuffle theirprogramming lineups, and repeat missed parts of shows.

TiVo has garnered considerable attention from investors. Along withAOL, TiVo's list of high-profile backers includes Microsoft co-founder PaulAllen, 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., RogersCommunications and Universal Music Group, among others.

AOLTV boxes will begin incorporating TiVo features in early 2001, thecompanies said.