Dear William,

We have some good news and some bad news. The bad news is that, as of 3/31/12, the Blockbuster app will no longer be available on your TiVo DVR. We are updating our technology platform and will not be able to continue supporting your device.

You won’t be able to watch movies from Blockbuster On Demand on your device, but you can still watch on any of our other devices or stream via PC or Mac. See a list of supported devices.

Your friends at Blockbuster

I spoke to TiVo on Friday, and they basically found out about this along with the rest of the world – the day before. Neither Blockbuster, nor parent Dish Network, had notified TiVo that this was coming. TiVo had just started discussions with Blockbuster after hearing the news, and those are still ongoing. TiVo says they’ll make a statement on this once they have something concrete to say.

The reason for this really has nothing to do with TiVo, or any of the other similarly impacted platforms that are losing Blockbuster. This all started back in 2007 when Blockbuster attempted to enter the digital movie market by acquiring Movielink. This attempt failed, so in 2009 they decided to try again by partnering with CinemaNow, which had just been acquired by Sonic. Ever since then Blockbuster’s download service has been powered by Sonic, which has since been acquired by Rovi.

Blockbuster’s deal with Sonic expires on 3/31/12, and they aren’t extending it. Since all of the current platforms that support Blockbuster’s download service use the Sonic implementation, they’re all going to stop working – and that includes TiVo.

While most Blockbuster On Demand products have been using the download service, for a while now Blockbuster has also had a streaming service. It is used primarily to support mobile devices and computers, although Samsung has been supporting it on some of their recent home entertainment products as well. It looks like Blockbuster is phasing out the download service completely, in favor of going streaming only.

This streaming service also provides hope for Blockbuster On Demand’s return to TiVo and other platforms. Samsung has already shown that home entertainment devices can support the service, and I suspect there is no technical barrier to bringing it to devices such as TiVo. However, presuming the business side of things is addressed, it will still require all new development to implement the streaming client for each platform. Given the time needed for development, and then testing, I wouldn’t expect to see anything in the near future.

Also, the streaming service isn’t going to support older hardware that can’t handle new codecs. That means, just like Netflix, Hulu Plus, YouTube, etc., it will never hit the older TiVo Series2 platforms. And while technical reasons will keep it off of the Series2, I expect business reasons will keep it off of the Series3 as well. Any new client development will almost certainly be done in Adobe Air in the new SDK, just as with Hulu Plus. This will only run on the new Series 4/Premiere hardware. Since the Series3 line is no longer produced and sold, there is really no justification for investing resources in developing an HME-based client just for that platform.

So Blockbuster On Demand is going away, but it may be back at some point – as a streaming app on the Premiere.

This acquisition has spurred talk in some circles about TiVo’s fate. Why? Well, a number of people think TiVo is a candidate for a buyout. TiVo still has a poison pill to prevent a hostile takeover, but that is expiring in November. And even with the pill in place the BoD can accept a buyout offer at any time without triggering the pill. The pill just helps prevent hostile bids.

There has been speculation that Google could be a suitor. TiVo has a history with hardware, a successful DVR platform, and deals with MSOs. All things Google could use to beef up Google TV – but now all things they have in Motorola, only moreso.

On the other hand, TiVo is involved with patent lawsuits with Verizon (who uses Motorola HW) and AT&T (who also uses Motorola HW), having recently finally settled with Dish Network for $500 million. If Google feels that they may have a liability in these suits, it is possible that they would seek to have them settled as part of the acquisition. Possibly even buying TiVo in order to do so, along with acquiring their patents which could be useful for Google TV and Motorola’s own DVRs. Though I think that’d be a drastic step to take, they could likely settle with TiVo for less than the cost of a buyout. They’d really have to see value in owning the whole package to go that far.

Personally, while my dream marriage would be Google buying TiVo and integrating it into Google TV, I think that is much less likely to happen now that Google has MMI – on top of their recent SageTV acquisition. They’ll have everything they need to roll their own super STB in house once the Motorola deal closes.

On the other hand, if I’m Cisco, Motorola’s largest competitor in the STB market, I might be looking to beef up my product offering. Cisco and TiVo already work together – Cisco is providing the hardware for Virgin Media in the UK and ONO in Spain. So they have a solid track record. Cisco’s STB software has perhaps a worse reputation than Motorola’s, and offering a TiVo-based solution could be a real shot in the arm for them. Especially if Google does push Google TV onto Motorola DVRs.

Cisco also has a retail presence through Linksys, and increasingly under their own brand. They’re familiar with STB hardware, DVRs, retail, and TiVo’s software. They could conceivably add the TiVo Premiere, Premiere XL, Premiere Elite, and Preview to their STB lineup as is for both retail and MSOs. Motorola did something similar when they offered a couple of Moxi-based DVRs and the MoxiMate to MSOs. Those units were unlike any others in their lineup. That would be a rapid way for Cisco to offer a TiVo-based solution, and then they could incorporate the interface into their other STBs going forward.

Of course, that’s all pure speculation. Cisco seems to have little to lose in buying TiVo though. There’s nothing to upset the existing MSO deals in the US, or in most other countries. Most of the foreign TiVo deals are using TiVo developed or Cisco HW already. It could cause some friction with the DirecTV deal as that is using Technicolor HW, same for the Scandinavian deal with Canal Digital, but that could be addressed in contracts. And even if it killed the deals, I think Cisco could live with it. The DirecTV deal is approaching two years past due now and there’s reason to be skeptical about it ever coming to fruition at this point anyway.

I don’t think it would cause an issue for deals like the Best Buy Insignia TVs as there is no direct competition with any Cisco products. They’re complimentary, not competitive.

On the other hand it would give Cisco’s STB product line a boost when trying to land deals with MSOs against Motorola, especially if the latter gets Google TV.

In light of the Google-Motorola deal, as pure speculation, I think I’d consider Cisco the leading candidate to acquire TiVo at this point. I don’t necessarily think it will happen, just that if anyone did I’d put them in the lead.

As for other suitors that have been speculated on.

Apple – No way. They have a strong ‘Not Invented Here’ culture. TiVo is Linux based, Apple uses BSD, it’d be a major rewrite to bring TiVo over to iOS to merge it with Apple TV or the like. And Apple is all about providing content silos via iTunes, I’m not sure a DVR fits their plans.

Microsoft – Doubtful. MS is mildly allergic to Linux. They already have Media Center and successful IPTV STB software – AT&T runs on it. They also have the Xbox 360 for OTT content. Media center extenders are neglected, but still out there too. If MS wanted to get into the DVR business I think they’d roll their own based on their existing STB software before buying TiVo.

Rovi – Maybe. Rovi, formerly known as Macrovision Solutions Corporation, has several product lines, including software for set top boxes. If they had an inclination to get into DVRs and get onto more MSO boxes, they might do so via TiVo.

Dish Network or EchoStar – Doubtful. There was speculation that they may buy TiVo as a way to settle their long-running lawsuit. But now that they’ve settled the case I don’t see Dish or EchoStar having a good reason to buy TiVo. EchoStar already has one of the better DVR platforms out there, along with Slingbox, so they have little to gain in a buyout.

DirecTV – Doubtful. With the new DirecTiVo sliding further and further to the right, DirecTV hardly seems excited about TiVo. They already have a deal in place that covers TiVo’s patents, and they seem to be happy evolving their own DVRs. And they already acquired ReplayTV’s IP a few years back, so they have DVR patents of their own too.

I’ve seen other speculation – that NDS might buy them to kill the competition off or that Comcast (or another MSO) will buy them to monopolize the TiVo interface on their network, etc. But all of those seem even less likely to me.

Right now, I think Cisco would gain the most from acquiring TiVo.

Of course, then again, Cisco has been pulling back from consumer products, such as in shutting down Flip. So I might be completely off base.

But, like I said, this is all just speculation. It is fun to talk about, but I’m not going to put down money on any of these deals happening.

So, what do you think? What does the Google-Motorola deal mean for TiVo, if anything? Or who do you think might be a suitor for TiVo? Or do you think that’s backwards and TiVo is going to use part of their $500 million award from EchoStar/Dish to buy someone else? Or just grow organically?

Leave a comment with your thoughts!