IPO-Bound TiVo Gets Sony Backing

Personal-video-recording vendor TiVo Inc. last week landed
a strategic partnership with Sony Corp. of America, set a proposed share price for its
initial public offering and gained national distribution through consumer electronics
retailer Best Buy.

The Sony deal gives the consumer-electronics giant a
minority stake in TiVo, in exchange for an undisclosed investment. Through separate
divisions, Sony will build and distribute TiVo hardware as well as provide content for
TiVo subscribers.

TiVo plans to sell 5.5 million shares of common stock for
$11 to $13 a share on the NASDAQ exchange, the company said in a filing with the
Securities and Exchange Commission. The funds will be used to provide working capital and
to support the company's advertising and promotional efforts.

According to TiVo president Mike Ramsay, Sony could
contribute interactive game shows, music and video-on-demand content to TiVo. Like other
programmers, Sony can showcase its television programming with highlights of upcoming
shows. TiVo has about a dozen programming partners right now, and a dozen more in the
works, Ramsay said.

Sony will call its TiVo hardware a "personal-video
recorder." Ramsay said he is comfortable with the term as a generic name for the
category, and hopes its use will bring consistency.

Personal-video recorders from TiVo and rival Replay Network
promise to change the way consumers watch television by allowing them to time-shift more
easily, storing programming on a hard drive, grouped by theme, at the user's request.

Analysts said the strength of the Sony brand name adds
credibility to the category. But the Yankee Group's Bruce Leichtman said PVR vendors
need to find a unique selling proposition beyond just time-shifting in order to drive
sales, especially of stand-alone boxes.

"A TiVo/DVD [digital-video-disc player] would be a
nice combination," Leichtman said.

Over time, Sony plans to incorporate TiVo technology into
other consumer electronics devices, but the company would not offer details last week. One
likely prospect would be direct-broadcast-satellite receivers from DirecTV Inc., which
also has a strategic partnership with TiVo. Philips Electronics plans to distribute a
combination TiVo/DirecTV box next year.

Sony has not yet set pricing for its first TiVo stand-alone
boxes, which are set to hit retail sometime next year.

Last Friday, Best Buy began selling Philips-branded TiVo
personal video recorders for $499 in its 333 stores nationwide. The service also carries a
subscription fee.

"We expect TiVo will be one of the hot gift items this
holiday season," Best Buy senior vice president of consumer electronics Phil
Schoonover said in a press release.