Who will buy TiVo? Google, Yahoo or Microsoft?
There is no doubt in my mind that the internet will enter the living room and become a standard form of entertainment on our TV sets.
This is happening already today and being fueled by the explosion of video content appearing online.
Knowing that the internet is going to take over the living room the three heavily competing big online names, Google, Microsoft and Yahoo, must be thinking how they can ensure they can be the prominent internet company on your TV.
There is one company that Google, Microsoft or Yahoo could acquire to ensure they will be well placed on the living room TV, and that company is TiVo. Here is why:
- Unlike cable companies TiVo is happy for online video to enter the living room as it does not disrupt its business model.
- It has a huge subscriber base which I suspect is over 4 million by now.
- TiVo is relatively small and worth about $700 million (a slight increase over their current market cap).
Microsoft seems to leave no stone unturned these days. They have already got into the living room with the Xbox and are getting into our hands too with the Zune PMP.
With the Xbox, Zune, IPTV middleware and Media Center PCs already in hand, Microsoft is ahead of everyone and has the living room well covered.
Not to mention that TiVo is powered by Linux and we all know Linux and Microsoft don't mix.
For those reasons I think we can safely leave Microsoft out of the running.
Yahoo, along with Google, was interested in buying TiVo, according to reports from April last year.
Although TiVo was not taken over by anyone, Yahoo has partnered with TiVo to provide a number of online services on TiVo PVRs already.
The already strong bond between TiVo and Yahoo makes good ground for an acquisition by Yahoo.
Yahoo has historically made some very big acquisitions in the past as high as $5.7 billion for broadcast.com back in 1999. With no serious acquisitions this year TiVo could be a well priced choice.
Yahoo has been left a bit in the cold as it has seen profits drop and Google buy YouTube. Competition is fierce between Google and Yahoo and securing its services on TiVo could give Yahoo an advantage it desperately needs.
Google is always keen to buy traffic for itself; this could not be shown more clearly with the purchase of YouTube.
For a company that paid $1.6 billion for YouTube then paying $700 million for TiVo seems like a good deal. It would give Google access to the millions of TiVo subscribers which are also from a different demographic to YouTube.
Google is already working with video ads, which could be used in conjunction with YouTube to offer video content on TiVo. Google already has very good potential to monetize on TV viewers.
However, with such a hefty purchase already this year, Google may not have enough pockets to handle this acquisition just yet, and could potentially spread itself thin.
Even if Google does not buy TiVo then YouTube can still offer it a way into the living room since it is so immensely popular. There are already rumors of YouTube being offered in the living room via the Apple iTV.
In addition to the three search engine giants there are some other companies that could be interested in TiVo. For example:
- Apple iTV - unlikely due to conflicts with the Apple iTV.
- Time Warner & AOL - possible as it could leverage AOL's internet video endeavors and Time Warner could use it to thwart other content producers and cable companies.
- Amazon – possible as it could bring Amazon Unbox to a wide audience (talks on a partnership are already in progress), although I don't think Amazon is big enough to buy TiVo.
The internet, especially internet video, is without a doubt heading into the living room.
TiVo's CEO believes that internet television played on TVs will challenge regular broadcast TV over the next 10 years.
With this in mind it seems only a matter of time before Google or Yahoo might pull out their wallet to buy TiVo.
If I had to hedge my bets now. I think it would be Yahoo since they are already partnered with TiVo and seem to be falling behind Google.
Bearing in mind Microsoft is already well positioned in the living room, the purchase of TiVo by Yahoo could leave Google out in the cold.
Google would be left with a very difficult route into the living room, while Yahoo and Microsoft sit comfortably on the couch.