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Company News | Reuters.comReuters Summit-DirecTV to stop marketing TiVo
Wed Aug 10, 2005 7:14 PM ET

NEW YORK, Aug 10 (Reuters) - DirecTV Group Inc. on Wednesday said it plans to stop marketing digital video recorders from TiVo Inc. this year, as part of a broader plan to replace them with News Corp. -created technology, a top executive said on Wednesday.

DirecTV is TiVo's single largest customer and accounts for two-thirds of TiVo's total subscribers.

"The product we will market is our product," DirecTV Chief Executive Chase Carey said at the Reuters Telecommunications, Cable and Satellite Summit in New York.

The move could be a blow to TiVo, the Alviso, California company, whose name is synonymous with digital recorders that let users pause live television broadcasts and pre-record shows.

By October, the top U.S. satellite television operator plans to begin selling a new digital video recorder and set top box that will feature technology made by NDS Group Plc , a company that shares a controlling shareholder with DirecTV in News Corp.

News Corp. owns a 34 percent stake in DirecTV.

DirecTV's decision to use News Corp. technology is part of a broader plan to replicate video-on-demand viewing, which has been a defining competitive advantage of cable operators.

Satellite television technology only provides for a one-way broadcast of video programming, unlike cable TV, which also lets users send requests back to the cable system.

Cable customers are able to order up movies and shows at a click of their remote.

By next year, DirecTV will begin offering higher capacity digital video recorders using NDS technology that will automatically store frequently watched encrypted programming and movies onto the recorder's hard drive.

While it is not considered a true two-way video on demand system, such distinctions could be vague to viewers who find what they want to watch automatically stored.

"If you don't have a (digital video recorder) from us, you won't be getting the DirecTV experience," Carey said. "TiVo will only be available to the people who would ask."

Ahead of the new digital video recorder launch, DirecTV is currently offering new customers a free TiVo recorder through a $100 mail-in rebate.

Last week, Carey told Reuters that the company had no immediate plans to purchase more inventory from TiVo, but did not specify a time frame.

TiVo's contract with DirecTV ends in 2007. Carey declined to comment on whether it would be extended beyond that time and said it was contingent on whether TiVo could find a way to serve a part of DirecTV's market.