After years of struggles, TiVo Inc. is finally making big inroads among cable operators.
TiVo reported earlier this week that it netted 277,000 subscribers through its expanding roster of pay-TV partnerships, notching its largest quarterly increase in this area in more than seven years. The DVR pioneer closed March with 2.4 million cable and satellite TV customers, up from 1.4 million a year earlier. It now has a total of 3.4 million subscribers, including about 1 million consumers who bought the TiVo boxes on their own.
As a result, Tivo's cable service revenues nearly doubled on a year-over-year basis. The company reported US$8.1 million in MSO-related revenues for the first three months of the year, up from $4.1 million a year ago.
These gains weren't enough to keep TiVo out of the red for another quarter, though. The company still lost $10.3 million on total revenues of $82.6 million. But it cut its losses in half from a year ago and beat its own financial guidance targets as well as Wall Street analysts' estimates.
TiVo's cable subscriber increases came from a number of different sources. The biggest gains came from its largest MSO partner, Virgin Media Inc. The U.K. cable operator added 172,000 TiVo subs during the first quarter, boosting its total to 1.5 million, or 40 percent of its entire video customer base.
The big question going forward is whether Virgin will stick with TiVo once Liberty Global Inc. completes its takeover of the British operator. Liberty Global has taken a very different tack with its next-gen video strategy, focusing on deploying its own QAM/IP video home gateways rather than advanced set-tops such as the TiVo boxes.
TiVo CEO Tom Rogers is acting confident that his company will continue to prevail with Virgin. In a recent interview with Multichannel News, Rogers said Liberty is already working "quite closely" with TiVo and "has come to appreciate the value that TiVo brings to Virgin more and more."
Besides adding cable subscribers in the U.K., TiVo picked up more than 65,000 subscribers in Spain with ONO, increasing its total with that MSO to 166,000. TiVo also added more cable customers in the U.S., mainly with Suddenlink Communications. Suddenlink reported earlier this month that it has now installed about 80,000 TiVo boxes in subscriber homes.
In addition, TiVo is continuing to expand its line-up of cable partners. During the past few months, the company has signed up such leading Tier 2 U.S. MSOs as Midcontinent Communications, General Communication Inc. (GCI) and Atlantic Broadband. And it expects to start deployments this summer with Mediacom Communications Corp. and Cable ONE Inc. in the U.S., as well as Com Hem AB in Sweden.
One big shadow looming over TiVo is its ongoing patent battle with Motorola Mobility LLC, which Google recently sold to Arris Group Inc. With the potentially $1 billion case scheduled to go to trial June 10, analysts are anticipating a verdict or settlement within the next four weeks.
Although TiVo's prospects in the case are still uncertain, at least one patent expect thinks TiVo could win big. In a conference call earlier this week, David Sunshine, a patent attorney with Cozen O'Connor, said TiVo's chances "look quite good." He cited TiVo's victories in three other patent suits, as well as the generally pro-plaintiff nature of juries in the eastern Texas court district where the trial will take place.
— Alan Breznick, Cable/Video Practice Leader, Light Reading