Could TiVo And Roku Beat Apple To TV Nirvana?

Fifth in a series.

Everyone has something to say about Apple, especially about the prospects for what could be its next big thing: a television.

In a recent magazine story, I laid out the prospects for what some people are calling the iTV, as well as the considerable challenges Apple faces in bringing it to market. I couldn't include all the insights I got from smart people in tech and media, so in a series of posts, I'm sharing some of their thoughts to shed a little more light on what Apple can and can't do in television.

While Apple remains apparently stymied in its attempt to remake the television business, makers of TV add-on devices are slowly and quietly worming their way toward a new world of television. I talked with executives from TiVo, the digital video recorder pioneer, and Roku, one of the most popular TV show and movie streaming devices, and came away wondering--though I'm not yet convinced--if their slow and steady approach might give them a leg up on companies such as Apple that seem to want to change the basic underpinnings of the TV business.

Roku CEO Anthony Wood, for one, thinks that the more content moves to Internet delivery, the more companies such as his are in a position to control TV distribution. That claim may sound a bit much to Comcast and Time Warner, and even to the likes of Netflix and Hulu that are the prime reason people buy a Roku streaming device.

Yet Roku's steadily making progress. As of last fall, it had sold more than 3 million of its devices, not so far off from Apple's 5 million at the time. In many reviews, Roku comes off better than Apple TV because it has many more content sources and its low-end product costs less than Apple's streamer.

Roku is also starting to get the attention of pay TV companies. In a deal with Roku announced in January, for instance, Time Warner Cable became the first pay TV company to stream its full live TV through a Roku. That followed a new $45 million round of funding last July that included investments by News Corp. and British Sky Broadcasting.

Last year, Roku also inked a deal with Dish Network to stream the satellite company's international content to Roku's box. And although Apple was rumored recently to start offering HBO Go, the cable station's online offering of some 1,700 shows and movies on demand to subscribers, later this year, that will come about a year after Roku got it.

This detente with TV powers is something of a switch from a couple of years ago, when Roku was touting its products to cable cord-cutters. "We view ourselves as a platform for TV," says Wood, who insists that Roku and Apple will prevail as the two main streaming TV platforms. Roku is privately held, but it has said it had $100 million in revenues in 2011, double the previous year, though it's still losing money.

TiVo also seems to be aiming to get past its rocky relationship with those same TV powers, partly because it has won court battles with them over various patents. After a fourth-quarter earnings report on Feb. 26 that showed more revenue but a bigger loss than analysts had expected, CEO Tom Rogers told Bloomberg that it's trying to become a platform for content on all kinds of devices. "We’ve extended the story to whole-home and multi-device services,” he said. “The traction we’re getting with operators speaks to that, and we have a good deal of innovation coming this year.”

Revenue from pay TV systems, in fact, was up 83%, he noted. Last year, British cable company Virgin Media added 1.4 million new subscribers through a deal to use TiVo DVRs as settop boxes. Rogers said he expects that relationship to continue despite the Feb. 6 deal by Liberty Global, which uses its own settop boxes, to buy Virgin.

Jim Denney, TiVo's vice president of product marketing, told me that the company believes its products' simplicity and breadth of content offerings, which now include Netflix, Amazon Instant Video, Hulu, and others, gives it a leg up on Roku, Apple, and others such as Boxee. And he sees more pay TV operators willing to offer a TiVo settop box and DVR that offers them. "The vast majority of users just want TV to be easy," he says. "The best value is to be able to provide one place to get access to all the sources of television."

None of this adds up to the full-on watch-anytime/anywhere revolution some viewers want. But even in technology markets, sometimes steadily chipping away at the foundation succeeds better than trying to blow it up.