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TiVo Offers DVR to Cable-Free Viewers After Aereo Ruling

By Sonali Basak and Alex Barinka
August 25, 2014 4:12 PM EDT 20 Comments

TiVo Inc. is offering a digital-video recorder for people who don’t subscribe to cable or satellite television, seeking to capture more customers after video-streaming startup Aereo Inc. halted operations.

The TiVo Roamio OTA DVR, equipped with an antenna, can record over-the-air content from broadcast networks including ABC, CBS and NBC, as well as stream Internet video from Netflix Inc. and YouTube, according to a statement today. The limited edition device costs $49.99 with service fees of $14.99 per month and a one-year commitment.

TiVo said the DVR is “simple, brilliant and legal.” The company is introducing the device almost two months after the U.S. Supreme Court said Aereo, an online startup, violated broadcasters’ copyrights.

“They’re gunning for the same market Aereo was going for,” Clay Brockman, an analyst at Height Analytics, said in an interview. “They’re advertising: ‘Cord-cutters, come to us.’ Cable costs are going up, broadband speeds are getting better and the market is there to be had.”

In June, the court said that Aereo -- which, for as little as $8 a month, let each user record and stream over-the-air video using a tiny antenna stored at an Aereo facility -- threatened the underpinnings of the broadcast industry by selling programming online without paying licensing fees.

Replacing Aereo

Shares of TiVo were little changed at $13.60 at the close in New York. The stock had gained 4.4 percent this year through Aug. 22.

Virginia Lam, a spokeswoman for Long Island City, New York-based Aereo, declined to comment on TiVo’s new product.

TiVo Chief Marketing Officer Ira Bahr said TiVo has been developing the cable-free Roamio for at least a year. Aereo, backed by billionaire Barry Diller, began operating in February 2012.

“What Aereo’s product demonstrated was that there are large numbers of people who are interested in addressing this market,” Bahr said in a phone interview. “With this Aereo ruling, they were left stranded. We think that TiVo is an excellent solution for anyone who was looking for that kind of product.”

Aereo helped fuel the growth of cord cutters. The number of Americans who pay for TV through cable, satellite or fiber services fell by about 251,000 last year to about 100 million, the first full-year decline, according to research firm SNL Kagan.

Legal Technology

TiVo’s service is legal because consumers can capture and record content through in-home devices, said Steve Wymer, a spokesman for the San Jose, California-based company.

“The technology is not anything new,” Wymer said. “We never had legal challenges regarding recording content in the home for an individual consumer.”

TiVo already offers a service to capture over-the-air broadcast signals with a $200 Roamio, which is coupled with a cable-TV subscription. The new device removes the need for a cable connection to the TiVo box and lowers the price, Wymer said. It will be sold in select Best Buy Co. stores, according to the release.

Bahr estimates the market for a product like the new Romaio, which is less expensive and delivers only over-the-air signals, may be 20 million to 50 million households.

Roku, Apple TV

TiVo’s new device puts it more in competition with products such as Roku Inc. and Apple TV, which offer alternatives to people who don’t have cable or satellite TV. Roku, a maker of set-top boxes that connect TVs to the Internet, costs as little as $49.99, while Apple Inc.’s device is about $100. Those products don’t have antennas to capture over-the-air content. To stream live broadcast programming, a customer could buy another device with an antenna from Really Simple Software Inc.’s Simple.TV for $199.99 to $349.99.

“Taking cable out of the equation allows them to put a simpler option on the table,” said Richard Tullo, an analyst with Albert Fried & Co. in New York, in an interview.

“It’s smart,” Tullo said. “They’ve always had the capability to distribute OTA TV, this expands the platform a little bit.”

Aereo had distributed Bloomberg TV to subscribers. Bloomberg LP is the parent company of Bloomberg News and Bloomberg Television.

To contact the reporters on this story: Sonali Basak in New York at sbasak7@bloomberg.net; Alex Barinka in New York at abarinka2@bloomberg.net

To contact the editors responsible for this story: Sarah Rabil at srabil@bloomberg.net; Rob Golum at rgolum@bloomberg.net

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