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TiVo Embraces Low-End DTAs

Alan Breznick
2/25/2014

For the first time in its history, TiVo is going low-brow.

TiVo Inc. (Nasdaq: TIVO), the DVR pioneer that has always focused on developing and deploying its service on advanced digital set-top boxes, announced a deal with Vyve Broadband Tuesday to develop "advanced capabilities" for the cable operator's new digital transport adapters (DTAs). Vyve, a two-year-old MSO formed by two former Bresnan Communications executives and originally known as BCI Broadband, will incorporate versions of TiVo's popular user interface and search and recommendation engine into low-cost HD-DTAs provided by Evolution Digital LLC . (See Top European MSOs Embrace Next-Gen Video.)

Terms of the deal were not disclosed.

DTAs are generally cheap, dumb, one-way digital-to-analog converters that a number of US cable operators have used to deliver digital video services to customers with older analog TV sets. In particular, such large MSOs as Comcast Corp. (Nasdaq: CMCSA, CMCSK) and Suddenlink Communications have deployed DTAs to convert their markets to all-digital services quicker and cheaper than they could otherwise, freeing up their analog spectrum for more HD channels, faster broadband speeds, and other digital services.

The big problem with the basic DTAs, though, has been their one-way nature. Due to this restriction, the small set-tops haven't been able to support premium channels, video-on-demand (VoD) services, pay-per-view, or even on-screen programming guides, thereby limiting what the cable operators can offer to their customers.

Fortunately for Vyve, Evolution's HD-universal DTAs (or uDTAs) are smarter than the average DTA. Unlike the basic models, these next-gen digital adapters can support both premium channels and on-screen programming guide grids.

Vyve aims to take the Evolution HD-uDTAs a notch or two higher by bringing in TiVo to team with Evolution. Plans call for Vyve, which has about 70,000 video subscribers and passes more than 300,000 mainly rural homes in eight states sprinkled throughout the US, to start deploying TiVo in April as part of its all-digital rollout. That rollout will also feature the launch of more than 140 HD channels in each market.

Vyve said the deal will enable it to offer "TiVo's best-in-class user interface" with "a new powerful guide and unique-to-the-industry recommendation features. In a statement, Vin Zachariah, senior vice president of residential services for Vyve, added that the pact will help the cable operator meet its goal of "proving next-generation broadband services to our non-urban markets."

For its part, TiVo said it viewed its initial foray into the DTA business as "a very important deal for the company." In his own statement, Thomas Elam, vice president and general manager of TiVo's service provider unit, said his company is "keen" to build on its new partnership with Vyve and Evolution so it can "rapidly expand" in the DTA area. He said TiVo also sees the potential to work with its partners to "provide additional products, such as whole-home solutions."

As luck would have it, TiVo will stage its fourth quarter earnings call with analysts late Wednesday. Look for more discussion of this new partnership in our coverage of the company's call and earnings report.

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

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albreznick
albreznick
2/26/2014 | 9:31:24 PM
Evolution HD-uDTAs Clarification
In the original version of the story I posted, I failed to mention that the Evolution HD-uDTAs that Vyve is deploying are much smarter than the average DTA. Unlike basic STAs, these next-gen digital adapters can support premium channels and on-screen programming guide grids. Sorry, folks. I've corrected that in the story now.  
albreznick
albreznick
2/26/2014 | 9:21:41 PM
Re: Everybody wins
I agree that this is a smart move by TiVo. It opens up a whole new market for them. Like Dan says, they should've done it earlier. Glad they finally wised up. 
kq4ym
kq4ym
2/26/2014 | 4:45:33 PM
Re: Everybody wins
Tivo has always seemed to have the best user interface for it's DVR products and now they can get a foothold into the 300,000 non-urban customers with the so-call low-end product. The question will be whether they can convice enough of the current customers to upgrade and buy the new offerings or to get new customer to order the expanded services available.
danielcawrey
danielcawrey
2/26/2014 | 3:31:24 PM
Re: Everybody wins
I totally agree with @Phil_Britt here. This is a smart niche play.

People continually want to watch when they want to, not the other way around. This is true anywhere, even in rural areas. 
Phil_Britt
Phil_Britt
2/26/2014 | 8:10:16 AM
Re: Everybody wins
I think this is a great idea to address the consumer who has 1 DVR, but does not have U-Verse or another such service that will enable the networking of the device and instead has lower-end boxes for additional televisions. Could be a fairly large niche for the provider.
DOShea
DOShea
2/25/2014 | 5:48:52 PM
Re: Everybody wins
Probably the kind of deal TiVo should have done a while ago, but was too proud to consider. Great potential to expand its appeal into new households, assuming Vyve has an accurate assessment of its own market potential.

 
Mitch Wagner
Mitch Wagner
2/25/2014 | 2:34:57 PM
Everybody wins
TiVo  gets a new licensee for its software, Vyve gets more attractive product, cable companies get potential new customers for their digital services, and people with older analog TVs can now subscribe to premium services. Everybody wins.

On the other hand, if these consumers have the money to subscribe to premium services, wouldn't they have upgraded their TVs already?
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