Tivo: AMZN unbox movie downloading service a game changer.

In the report issued on Feb 7th, SmithBarney had a following summary on Tivo announcement on partnership with movie downloading service with AMZN.

- TIVO announced a partnership with AMZN to provide internet movie downloads on TIVO's standalone boxes. While details are limited, we believe it could be a game changer for TIVO and movie d'load svs by providing an economical means to get PC content to living rooms. The product looks to have support from most of major studios and will "soon" launch to the public.

- Strategically, the product is part of TIVO's d'load strategy and follows other new prods that support user generated, TV, & music content. We believe these help make clear that TIVO is not just a DVR, but a living room media hub.

- While we do not expect a direct meaningful impact from the service near-term, it could boost standalone sales in 2H07 and, combined with cable deal rollouts, benefit overall 2H07 results. We maintain our Buy rating and $11 target price as we see TIVO continuing to gain traction through: 1) its stand-alone business, 2) MSO deals, and 3) DVR advertising.

In summary, the firm thinks that Tivo DVR service is beyond the simple DVR hardware and software provider. Tivo device is poised to become media hub where all internet content, TV media content, music content (recent deal with Real Network), and movie content (amazon and independent film producer) all converge on powerful search platform. In my opinion, this is the trend of the future that will bring significant business model change in the TV ad and content delivery industry. Tivo is revolutionalizing the industry and continues to differentiate its product against simple generic DVR makers. Tivo's search capability and ad delivery platform with its software enables the company to target significant business opportunities for the industry that Tivo is currently revolutionizing.

Although the profitability still remains elusive for the company as the industry is yet to embrace the upcoming model changes with open arm, it is inevitable that the trend will continue to point towards rapidly changing business climate for large media and cable companies. Tivo is in the heart of this phenomena and only question remains to whether the company would be around long enough to really take advantage of the revolution that it is creating for its market.

I continue to like Tivo's chance that the company will be able to grab niche (better yet large) market within DVR segment and the stock performance will eventually follow.


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