TiVo could change the big picture

Television New Zealand's moves to take a stake in TiVo technology show that it is looking at the long-term future of state TV and free-to-air television.

News of negotiations with TiVo Australasian rights owners - Australia's Seven Network - comes at an awkward time as the broadcaster is promising to cut $25 million from budgets to cover a slump in advertising revenue while having to meet tough Government demands for a 9 per cent return on assets in the year to June 30.

The TiVo purchase makes sound strategic sense.

The product is like My Sky and its later version My Sky HDi which have changed the way people watch television with an explosion in the number of television channels and an unwillingness for viewers to sit through long ad breaks.

TVNZ and other free-to-air broadcasters are trying to slow the number of people subscribing to pay TV and personal video recorder (PVR) My Sky - which is exclusive to Sky subscribers.

The digital free-to-air platform Freeview is part of the solution.

Free-to-air TV is losing viewers to Sky, which has 759,069 subscribers and is on target to have 80,000 My Sky HDi subscribers by June next year.

But supporting the new commercial venture - if TiVo comes to New Zealand people will have to pay a monthly subscription - while cutting programming budgets raises questions about why taxpayers should care about continuing to own TVNZ.

What are its ambitions other than its own commercial survival?

Personal video recorders - or digital video recorders as they are known in some markets - allow subscribers to easily timeshift programming - and to skip advertising.

Both My Sky and TiVo are capable of providing access to the internet, with My Sky allowing fast forward through ad breaks.

TiVo is increasingly adopting smart technology allowing the machine to select programmes for recording it calculates are likely to appeal to users based on earlier recording selections.

But TVNZ is also a key partner in the Freeview consortium and it is not clear how it would affect the PVRs that are licensed to channels on the Freeview free-to-air platform.

TVNZ and the Seven Network both refused to comment on Australian news website Crikey's report that TVNZ has paid A$15 million ($19 million) for one-third of the Australasian rights to TiVo.

TVNZ insiders said the move made sense as TVNZ faced the swift take-up of Sky and while the existing business plan - selling advertising time between programming - was becoming obsolete.

The reported A$15 million pricetag is said to include airtime on to promote the new technology to consumers.

But with TVNZ revenue still based on advertising there are questions about one of TiVo's defining features - the ability to easily skip through advertising.

And what will be TiVo's relationship with other free-to-air channels such as MediaWorks-owned TV3 and C4 and Sky-owned Prime TV?

In Australia all the networks joined Channel Seven on TiVo, making it a valid free-to-air alternative to the PVR available exclusively to the Aussie pay platform Foxtel.

MediaWorks spokeman Roger Beaumont insisted that the company knew nothing about the TVNZ move or plans for TiVo to come to New Zealand.

It is not clear whether whether Sky would allow Prime on TiVo - it has kept the channel off Freeview.