TiVo Inc. on Monday said it will begin testing a feature in the coming weeks to let some subscribers transfer recorded television programming to Apple iPod digital music players or Sony's PlayStation portable devices, sending the company's shares up 4.5 percent.
The new feature will only be available to "stand-alone" TiVo subscribers that are not among the 2.3 million customers from satellite TV operator DirecTV Group Inc.
TiVo's move bypasses Apple Computer Inc. whose decision in October to sell music videos and ABC TV network shows started much debate in the media industry about the end of the advertising supported TV business model.
One analyst briefed on the announcement said the new feature may raise "concerns" among program owners, who aim to profit from movies and shows either through DVD or online sales. But since TiVo employs open industry standards, there could be little legal recourse to halt their plans.
"The TV industry has to embrace video on demand in cable, Internet and other forms of video distributions even though there are many ways these technologies allow distribution that doesn't make them any money," said Josh Bernoff, an analyst at Forrester Research.
TiVo, which currently serves about 1.3 million stand alone subscribers, is aiming to differentiate itself from digital recorder services offered by cable operators, even as it seeks to land more cable distribution deals. It currently has a deal with Comcast Corp. and has said it was actively pursuing similar deals.
DirecTV plans to begin selling its own digital video recorder and will stop marketing those made by TiVo.
It's unclear how many users will actually have access to these features, however. Analysts said there were perhaps "hundreds of thousands" of Series2 users. But TiVo has not disclosed the number of customers using Series2 recorders that let viewers send recorded programs to home computers.
A TiVo spokesman said most of its customers are using Series2 boxes that are built with the ability to connect to a computer.
In order to move recorded programming to portable devices, TiVo will be required to purchase software that translates the programming into a file that can be read on either the iPod or Sony's (6758.T) PSP.
The files will be watermarked and traceable to originating computers to discourages piracy.
"The increasing popularity of mobile devices for viewing video such as Apple's iPod and the PSP device demonstrate the enormous consumer demand for entertainment on the go," TiVo CEO Tom Rogers said in a statement.
Shares of TiVo rose 19 cents to $5.46 on the Nasdaq in afternoon trading on Monday.