TiVo switches back on to British television in Virgin Media tie-up

The set-top box maker TiVo is a household name in the US but failed to crack the UK market. It is now back for a second go with a new partner. Nick Clark reports

The American company that revolutionised home TV recording is making a second assault in the UK, and has teamed up with Virgin Media to do it. TiVo plans to launch a "next generation" TV service with Virgin, pitting it against BSkyB and, potentially, Project Canvas. The first TiVo and Virgin branded boxes will be released some time next year.

The companies will develop the high definition set-top boxes that will allow Virgin subscribers to record programming on the box's hard drive, and access online content through a broadband connection. TiVo will provide the so-called middleware – which powers the boxes – and the software. The terms of the deal were not disclosed.

Neil Berkett, Virgin Media's chief executive, said, TiVo's record of innovation and patented technology meant it was "an ideal strategic partner for Virgin Media as we move aggressively to bring our next generation TV service to market".

Virgin's content is delivered into living rooms through fibre optic cables, which allow for faster speeds than the old copper wiring used by its rival BT. It already has a digital video recorder – the V+ box – but this will provide greater services with stronger technology, as well as access to the internet and its existing on-demand content. Mr Berkett said: "We believe it will do to the TV market what Virgin Media has done to the high-speed broadband market."

This is not the first time TiVo has attempted to break into the UK market. In 2000, it partnered with BSkyB and the set-top box maker Thomson Multimedia but it failed to take hold. The box was discontinued in January 2003 as BSkyB went it alone with the launch of its Sky+ personal video recorder. "Sky decided to go a different route, but it wasn't a failure, we developed some loyal customers," one TiVo executive said. Yesterday's move will put TiVo in direct competition with its former partner.

Richard Broughton, an analyst at Screen Digest, said: "The UK pay-TV market is very advanced, and there is room to grow in personal video recorders." Sky dominates the personal video recorder market. By the end of September, 5.9 million of its customers had a Sky+ box. Virgin's V+ has 749,000 – a fifth of its TV subscribers – while all of BT Vision's 436,000 customers have its V-Box recorder.

Mr Broughton said TiVo had more of a chance this time. "There is more demand for the service, as customers are more comfortable with it, and they have got better products and services."

The move could also pitch it against Project Canvas, whose partners include the BBC and BT, and aims to create a set-top box bringing online television into the living room. Sources close to Virgin said the group was waiting for more details about Canvas but the two could compete directly.

TiVo's president and chief executive, Tom Rogers, was buoyant on the group's return to the market yesterday. "We are very excited about this new distribution relationship with the UK's most-advanced pay-television provider," he said.

Naveen Chopra, the group's vice president of corporate development and strategy, said: "We've always had one eye on the UK, and the best way to do it was with a strong partner. Why now? We have become more aggressive about expansion."

TiVo was launched in 1997 in California with the world's first commercial digital video recorder. The device, developed by Jim Barton and Mike Ramsay, was hailed as revolutionary.

Yet, the company admitted it was seeking new revenue streams on Tuesday night after it revealed it had swung to a net loss of $6.6m in the third quarter. The previous year profits hit $100.6m. New users fell from 44,000 a year ago to 34,000 in the three months to the end of September.

"One of TiVo's main problems is that its subscriber numbers are falling quite rapidly, as a lot of operators roll out their own personal video recorders," Mr Broughton said. "This is a good deal for TiVo. Partnering with an established UK brand will make it easier to break into the market. It has to do more like this; get in with operators and put its technology into the systems."

Freesat offers BBC catch-up

Customers of Freesat, the free-to-air digital satellite TV group, will not have to worry about missing some of their favourite shows this Christmas, as it prepares to offer the BBC's online catch-up service.

Viewers will be able to watch programming via the iPlayer from as early as next month, Freesat announced yesterday. The service will be available to select users from 7 December, and "as many viewers as possible will be able to use the service by Christmas".

The company added that the ITV Player will be added in the first half of next year. Emma Scott, the managing director of Freesat, said the iPlayer had been "fantastically successful online so being able to offer viewers the ability to watch it in their living room on a subscription-free TV service for the first time will be transformational."

Freesat was set up as a joint venture between the BBC and ITV last year as an alternative to Freeview.

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