Today’s Sydney Morning Herald today ran an article which provides a potentially dire outlook for TiVo in Australia, saying the whole project could be scrapped before it even comes to market.

CHANNEL SEVEN’S planned TiVo digital video recorder service could be scrapped within weeks if free-to-air broadcasters proceed with their biggest assault yet on pay television.

The free-to-air industry is likely to launch its own FreeView-branded recorder early next year that will offer access to as many as 15 free digital TV channels and an electronic program guide.

It seems the free-to-air networks in Australia are banding together to launch a service modeled after the Freeview system in the UK. The idea is to compete with pay TV services, such as Foxtel. Part of that effort would be launching a Freeview DVR in Australia, which would compete with TiVo. As Seven’s initial plans for TiVo included having other broadcasters take a stake in the TiVo service, this could put paid to those plans and cause Seven to re-evaluate the launch of TiVo.

Current assumptions are that a Freeview STBs would start below AUS$100, while TiVo is expected to be priced between AUS$300 and AUS$500, plus a subscription fee. However, as in the US where TiVo competes with less expensive cable and satellite DVRs, TiVo would offer more features.

It is possible for TiVo and Freeview to co-exist in the market, with TiVo being a more premium product. And, as the TiVo launch had earlier been pegged for this month (though there are indications that’s slipped a bit), I’d have to expect Seven has already spent most of the money needed for development, testing, and preparing the infrastructure. So they may not have much to gain by killing the launch now – that’s money spent, and launching TiVo now gives them an edge in the market. And a DVR out before the Olympics. The Freeview effort is still in early discussions, and it seems unlikely that they’d be able to bring boxes to market before the Olympics, which are expected to drive DVR adoption.

Seven Network is refusing to comment on this issue, so we’ll just have to wait and see what develops.