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TiVo Scores Big Profits

Mari Silbey
8/28/2013

A major legal settlement pushed TiVo Inc. earnings sky high to nearly $269 million in the second quarter, while strong cable revenues offset retail subscription losses.

In its latest earnings release, TiVo reported quarterly revenue from technology and services of nearly $77 million. Stripping out the effect of the legal settlement with Cisco Systems Inc. and Motorola (now Arris Group Inc.), that number drops to just under $71 million. The settled lawsuit will continue to deliver cash in the future, however. The total settlement amounts to $490 million, including infringement and interest fees, and future licensing payments.

Ironically, given TiVo's start in the world, cable subscriptions now make up the bulk of the DVR company's business. TiVo added 238,000 cable subs in the second quarter, a jump of 33 percent to 3.6 million. This year alone, TiVo has introduced the TiVo Mini to cable operators, partnered with Pace to deliver a TiVo-powered gateway, and demonstrated its own TV Everywhere web portal for service operators. (See Suddenlink Rolls Out TiVo Mini and GCI, Pace Boost TiVo's Software Aspirations.)

The web portal has yet to launch with any customers, but Dave Zatz of Zatz Not Funny recently uncovered a generic PDF of an operator-branded web portal on TiVo's updated company website, suggesting the product is well established.

TiVo cable customers include Virgin Media Inc., RCN Corp., Charter Communications Inc., Suddenlink Communications, Mediacom Communications Corp., and General Communication Inc. (GCI), among others.

Meanwhile, TiVo's retail business is faltering. The company lost 26,000 retail subscribers in the second quarter, dropping its total just below 1 million customers. TiVo hopes to recover from its losses with the launch of the TiVo Roamio line of DVRs. The new set-tops have been highly praised in early reviews. (See New TiVo DVRs Top Cable Efforts.)

— Mari Silbey, Special to Light Reading Cable

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albreznick
albreznick
8/29/2013 | 12:49:50 PM
Re: TYiVo back in black
Yeah. Good point, Mari. There's probably enough room in the market for all kinds of difdrrent solutions. In my home, we're actually looking at the idea of an all-in-one DVR box because we don't want to rent a DVR-cable set-top from our cable company, Rogers. But that TiVo monthly fee is a real disincentive to do so. If we buy something, we want to get rid of those monthly fees. 
msilbey
msilbey
8/28/2013 | 8:27:23 PM
Re: TYiVo back in black
I held on to my standalone ReplayTV DVR for years just to avoid the extra monthly payment. (We still had non-HD, analog cable then.) But now I don't know that the cost of adding DVR on to a cable TV package is enough to counterbalance the up-front cost of a DVR at retail. 

That said, I do think there's room for a retail DVR/streamer/hardware-accessory market. And I believe there's room for segmentation in that market. Some people may want to buy a $35 Chromecast stick to supplement their cable box. Other power users may want to buy an all-in-one DVR at retail. Others may want a game console plus streamer. Not every product will survive, but I believe we'll have a range of options for quite a while. 
DOShea
DOShea
8/28/2013 | 4:45:45 PM
A whole new TiVo?
It seems to me that TiVo is on its way to becoming a different kind of company--a software firm. The windfall from legal settlements might be the bridge to that transition. The future has to be in software licensing with the likes of Pace, because it sure isn't in retail.
albreznick
albreznick
8/28/2013 | 11:59:14 AM
TYiVo back in black
So, Mari, do you think TiVo is back in the black for good? Or will it start losing money again once it uses up the settlement funds? What's the future of retail for TiVo? How many folks just want to buy a standalone DVR set-top?
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