Light Reading

TiVo Racks Up More Big Gains

Alan Breznick
2/27/2014
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Though it didn't quite hit all of Wall Street's financial targets for the quarter, TiVo wrapped up its latest fiscal year with record subscriber gains and revenue increases as it continued to make deals and deploy its set-top boxes and software in North America and Europe.

Wrapping up perhaps its best year ever, TiVo Inc. (Nasdaq: TIVO) added 319,000 subscribers in its fiscal fourth quarter, which ended Jan. 31, including a record 313,000 cable customers. As a result, it closed the fiscal year with 4.2 million subscribers, versus 3.1 million a year earlier. Most notably, it closed out the year with 3.2 million subscribers through its MSO partners, versus 2.1 million cable customers a year earlier. (See TiVo Boasts Record Gains.)

TiVo president and CEO Tom Rogers said the impressive cable subscriber gains came from both sides of the Atlantic as the company continued to make inroads in the US and Western Europe. For instance, the Spanish MSO ONO added 65,000 TiVo subscribers, boosting its total to 323,000. The Swedish MSO com hem AB brought in 38,000 new customers as it began its TiVo rollout in the fall. (See Top European MSOs Embrace Next-Gen Video.)

On the retail front, TiVo reported 6,000 new retail customers in the quarter for its boxes. Though that number seems pretty paltry, it represents the company's first quarterly increase in TiVo-owned subscribers in six years; a year earlier, it lost 13,000 retail customers. TiVo also boosted its gross retail subscriber additions substantially and cut its customer churn rate to the lowest level in almost eight years.

Rogers credited the retail turnaround to the consumer popularity of TiVo's line of next-generation Roamio set-tops, which offer large hard drives, more tuners, and the ability to stream live and recorded programming to multiple screens inside and outside the home. "Roamio is changing the way that viewers consume television," he said on the company's earnings call late Wednesday; 78% of streaming-capable customers are using the video streaming features each month. (See New TiVo DVRs Top Cable Efforts.)

Thanks to these subscriber gains, TiVo reported that fiscal fourth-quarter net sales revenue rose almost 20% from a year earlier to $106.3 million. That still fell below the Wall Street consensus estimate of more than $112 million. Full-year net sales revenue rose more than 30% to $406.3 million.

Despite the big revenue increases, TiVo posted a profit of just $710,000 for the quarter, mainly due to a onetime noncash charge of $4.8 million related to an earlier acquisition. Though the profit came in well below the Wall Street consensus estimate of $6 million, it still represented a reversal from a year earlier, when it posted a loss of $15.8 million. For the year, TiVo reported net income of $271.8 million, versus a $5.3 million loss for the previous year.

TiVo executives said they're looking for more gains on the cable and retail fronts in the coming year. In the US, the company is counting on Comcast Corp. (Nasdaq: CMCSA, CMCSK) to drive retail Roamio sales as the MSO, which has integrated its Xfinity On demand VoD service with TiVo boxes in 60% of its markets, rolls out that integrated service to the rest of the country.

Rogers said Comcast will extend the program's reach to Atlanta, Chicago, Houston, and the remaining markets by the end of June. "We feel very good about what Comcast has been able to do for us. We think we'll continue to push that hard in those markets."

TiVo is also looking for big returns from Digitalsmiths Corp. , the video search and recommendation specialist it bought for $135 million last month. With the addition of Digitalsmiths' customer base, Rogers said, TiVo has working relationships with 18 of the top 25 US pay TV providers, including Time Warner Cable Inc. (NYSE: TWC), DirecTV Group Inc. (NYSE: DTV), and Dish Network LLC (Nasdaq: DISH). (See TiVo to Acquire Digitalsmiths.)

— Alan Breznick, Cable/Video Practice Leader, Light Reading

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pcharles09
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pcharles09,
User Rank: Light Beer
3/18/2014 | 7:53:41 PM
Re: The future for TiVo
This is true. More importantly, it leads to forgetting that you ever had to make a choice at some point. I can see why providers don't want to give users an unlimited leash but at the same time, we don't like limits for things we pay for.
mhhf1ve
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mhhf1ve,
User Rank: Light Sabre
3/3/2014 | 4:41:18 PM
Too bad Simple.Tv isn't really a competitor
I was hoping Simple.TV would be a competitor to Tivo, but then Comcast started to encrypt all of its channels (since the FCC told them they could start doing so last year). Over the air transmissions are not quite the digital nirvana they were supposed to be. Instead of the "nice" snowy picture you'd get with analog OTA TV, digital OTA TV gives you a binary option of a clear picture or a garbled pixelated one (or a simple blue screen).

Hopefully Aereo wins in court someday!
DOShea
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DOShea,
User Rank: Blogger
3/2/2014 | 9:52:06 AM
Re: The quote...
Ok, I've been reading up on the Roamio family, and it (primarily the Plus and Pro versions) sounds pretty cool. It might be the best thing TiVo has done hardware-wise. Still, TiVo's adherence to cable-style exhorbitant pricing makes the Roku 3 look like a more attractive, if not diractly comparable, option.
Joe Stanganelli
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Joe Stanganelli,
User Rank: Light Sabre
2/28/2014 | 11:23:51 PM
Re: The future for TiVo
Actually, I'm partial to Comcast's UI.  Much less so with Verizon's UI.  Time Warner is okay (but now they're Comcast, so meh.)  Haven't really tried much else for the majors.
Joe Stanganelli
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Joe Stanganelli,
User Rank: Light Sabre
2/28/2014 | 11:23:00 PM
Re: The future for TiVo
Agreed, Mitch.  I myself had to give up DVR as a cost-cutting measure a few years back, and now I just shrug my shoulders and rely on online viewing for most of my vegetative needs.
Joe Stanganelli
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Joe Stanganelli,
User Rank: Light Sabre
2/28/2014 | 11:22:10 PM
Re: The future for TiVo
@pcharles: Hmm, well, on the one hand, back when I didn't mind spending the money on DVR, my pet peeve was having to eventually delete shows to make room instead of getting to indefinitely save my favorites.

On the other hand, I don't have to do that with my Netflix queue...which has led to me to keep hundreds of titles on there that I know I'll never get around to actually watching.

Not having to make a decision leads to not making a decision at all.
pcharles09
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pcharles09,
User Rank: Light Beer
2/28/2014 | 8:54:52 PM
Re: The future for TiVo
I guess it balances out either way. The monthyl rental amount for the provider's DVR box plus the additional taxes added due to it is probably not that far off from the $18-19.
pcharles09
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pcharles09,
User Rank: Light Beer
2/28/2014 | 8:53:26 PM
Re: The future for TiVo
I've never owned a TiVo but that's a good point that you keep it regardless of the provider. Now knowing that, don't you think it'd be cool if TiVo had cloud storage so essentially you'd never "run out" of space (correct me if they already have this...)
albreznick
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albreznick,
User Rank: Blogger
2/28/2014 | 4:55:08 PM
Re: The quote...
I think what Rogers meant, Dan, is that viewers are using their Roamio boxes to do a lot of video streaming, including streaming out-of-the-home. So that's not so 1999. But thst's notto say Rogers isn't still living in that era. He's been in the biz a long time now.     
albreznick
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albreznick,
User Rank: Blogger
2/28/2014 | 4:51:40 PM
Re: The future for TiVo
Yes, that extra $19 monthly fee for TiVo's service does drive many away. But, as Mitch says, the TiVo user experience is superior to what any cable operatorcan offer. So the tradeoff is worth it for many.
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