Soon-to-be-acquired ReplayTV has signed a deal to license its television recording technology to Motorola, the largest manufacturer of set-top digital TV devices.
Under the long-term contract announced Tuesday morning, Motorola will integrate ReplayTV's technology into 5 million digital cable set-tops during the next five years. Motorola's DigiCable business, based in Horshan, Pa., plans to offer the new product to cable operators in the fourth quarter. ReplayTV, based in Mountain View, Calif., would receive a royalty on each box Motorola sells, as well as fees to integrate the technology into cable operator systems. Further financial details were not disclosed
ReplayTV's technology enables users to record as many as 60 hours of television shows on a hard drive and avoid commercials with a 30-second quick-skip button. The licensing deal comes nearly three months after electronics maker SonicBlue announced that it would acquire ReplayTV for 15.5 million shares of common stock, which is currently trading at less than $5 per share. The acquisition is expected to go through by the end of this month.
Before the acquisition was announced, ReplayTV was struggling to compete against TiVo, whose sales surpassed ReplayTV in part because of TiVo's lower price, though it does carry a monthly subscription fee. Josh Bernoff, an analyst who covers television for Forrester Research, estimates that about 250,000 households currently have personal video recorders. TiVo reported having 154,000 subscribers as of Jan. 31, the latest date for which figures are available. Both companies face new competition from behemoth Microsoft, which this year launched its own digital recording device and interactive television called UltimateTV.
In November, ReplayTV announced it was changing its business plan to focus on licensing its technologies. It had previously subsidized manufacturers to sell its product. Motorola, which has sold 14 million digital set-top boxes, would be ReplayTV's first customer under the new business model.
The Motorola deal builds upon earlier tests that involved cable operator Charter Communications. Motorola's decision to license ReplayTV comes in response to Charter and other operators requesting personal video recording integrated into the set-top box, according to Motorola officials.
"It is projected this is probably going to be the next biggest thing," said Bernadette Vernon, director of strategic marketing for Motorola's DigiCable business.
