Posted on: Friday, October 19, 2001

TiVo licenses technology to Sony

By May Wong
Associated Press

SAN JOSE, Calif. — Shares of TiVo Inc. were up nearly 22 percent yesterday after the company announced a licensing deal with Sony Corp.

The deal lets the consumer electronics giant develop products using TiVo's digital video recording technology, including recently patented hardware and software designs.

The technology lets television viewers pause live programming and record shows onto a hard drive. Sales of DVRs, including set-top boxes by rivals ReplayTV and Microsoft's UltimateTV, have yet to take off.

The new licensing deal — and what TiVo hopes will be the first in a long-lasting licensing strategy — could change that by spurring more electronics manufacturers to make the devices, which in turn could drive down prices for the consumer, said Mike Ramsay, TiVo's chief executive officer.

At the moment, with special offers, prices of TiVo- or UltimateTV-based DVR devices range from $100 to about $400, but users must also pay additional DVR service fees. TiVo charges $9.95 a month, or $249 for a lifetime fee. ReplayTV doesn't charge service fees, and set-top boxes running on its platform range from $500 to $2,000.

Sony already makes DVR boxes for TiVo and UltimateTV, but the new seven-year licensing deal will give Sony more leeway to make its own designs or incorporate TiVo's DVR platform in existing products, paying royalties to TiVo along the way.

"Sony can do things with this technology that TiVo would never get to — we're not a consumer electronics company," Ramsay said. "And certainly they'll use their innovative skills to make products that consumers like."

Specific terms of the Sony agreement were not disclosed, but Ramsay said TiVo expects it to generate $10 million to $15 million in revenue for the next 12 months.