TiVo has had a long and troubled history in Canada. It was three years ago, way back in September of 2005 that TiVo extended their service into Canada, but they still didn’t officially sell units there. Users could buy units from the US and import them into Canada, but it was clearly limited support. It wasn’t until less that a year ago, in November, 2007, that TiVo became available at retail in Canada. Less than two weeks later TiVo was reported to be selling ‘extremely well’ in Canada. In March of this year TiVo was making a concerted marketing push in Canada, including in-store demonstrations.

Apparently the honeymoon didn’t last long. The ‘extreme’ sales were almost certainly due to years of pent up demand and, coupled with the rise of high-definitely, CBC News is reporting that TiVo is struggling in Canada. Unlike the US, where the FCC has mandated CableCARD for open access to digital cable, Canada has no such requirement. Like satellite in the US, cable in Canada is a closed system. If you want digital cable, including HD content, you have to use a cable company provided set-top box. In other countries, like Australia, over-the-air broadcasts still rule and digital broadcasting is actually increasing the use, but like the US in Canada cable dominates the market.

TiVo is currently selling the Series2DT in Canada, their only remaining unit that works with an external cable box. But the S2DT is limited to SD content only. And it is only dual-tuner for analog cable channels, for any digital channels it needs the external STB and it is limited to just one channel. This puts it at a disadvantage to the cable company DVRs which are dual-tuner and handle digital HD content on both. Without access to HD content, TiVo’s future in Canada will look increasingly bleak.

So what’s can TiVo do? Well, there are a couple of main options. The first is to do a deal with Canadian cable MSOs, such as Rogers Communications or Shaw Communications, similar to the deals with Comcast and Cox in the US. TiVo’s STB software could be deployed on Canadian cable STBs. Or such partnerships could see a version of the TiVo HD with built-in cable access (in place of CableCARD) distributed through the MSO as an alternative to the cable STB. That would be similar to the custom TiVo HD-based unit for Australia’s Seven Network. The issue here, of course, is getting such deals in place. It isn’t a technical issue but rather a business issue. And it isn’t clear that such deals would come together.

The other alternative is a technical solution, find a way to access the HD content from the system as it stands today. And the only real solution there would be to capture it from the HD component output on the cable box. Until fairly recently this was not feasible on a cost basis. The technology for HD component capture has existing for a while, but it is only now coming down to consumer price points. I reported from CES in January on the first wave of component input DVRs.

Hauppauge’s HD PVR USB add-on for PCs is one such example, but it is $249 for just a basic capture & encoding unit, the PC is doing most of the work. The Slingbox PRO-HD is another new device which can capture HD video and encode it on the fly, but it is similarly priced at $299.99. Now, those are retail prices, so the actual cost of the components to add such support is much less, but that’s just one input. To compete with dual-tuner DVRs TiVo would really need to add two HD input and encoder chains to the unit.

And it isn’t as elegant a solution while being more expensive. Not only would the TiVo cost more, but instead of one clean box you’d have the TiVo, one or two cable STBs, and the associated cabling and IR blasters. And if you had two STBs, to enable dual-tuner recording, you’d also have to contend with IR signal cross-talk to make sure signals meant for one STB aren’t ‘seen’ by the other. Still, as I noted in my TiVo HD review, it looks like TiVo may have considered at least one set of inputs for the TiVo HD. But those were probably not meant to be HD.

Perhaps TiVo could build a Hauppauge-like external USB capture box to connect to a TiVo HD via the USB ports. Such a dongle could be useful in general for other users as well, such as those using satellite but still wanting to use TiVo for HD content. Or users of cable systems which still don’t support CableCARD (some small operators have waivers). But the real question is if the market for such a solution, more expensive and less elegant as it is, is large enough to justify the costs in producing it. It is absolutely technologically feasible, but is it economically feasible? I’m not so sure it is.

There is a third option, but it seems even more remote. TiVo could convince Canadian regulators to impose open-access rules on Canadian MSOs, as the FCC has in the US. That could take the form of CableCARD (perhaps the simplest solution as it exists and is deployable today, warts and all) or some other solution such as DCAS. But passing new regulations tends to be a very slow process with little certainty.

I think, clearly, the best solution for both TiVo and the users would be a deal with the MSOs to bring the TiVo service to them at an affordable rate without lots of extra dongles and cables.

In any case right now TiVo’s future in Canada is hazy at best. As the Magic 8 Ball says – Answer unclear, ask again later.