What's next after the DVR? TiVo's not saying, but it does have something new planned on the product roadmap.
While acknowledging the continuing weakness of its consumer DVR business, which is prompting the company to reportedly axe 50 jobs and carry out other cost savings, TiVo Inc. (Nasdaq: TIVO) redirected the retail conversation in an address to investors with an unexpected product announcement. Only a few minutes into the company's quarterly earnings call, CFO and interim CEO Naveen Chopra said, "We will focus our resources on new product innovations that embrace changing consumer behavior, starting with an entirely new consumer product we expect to launch later this year, and we expect this and other new initiatives to be the key source of subscriber growth in our consumer business."
That was it. No detail on what the product might be, or what it might cost. When pressed further, Chopra would only say that he doesn't see the product being limited to a specific geographic footprint.
The product launch tease came amid disappointing quarterly retail results. While TiVo added 19,000 net retail subscribers, Chopra cited declining revenues for that portion of its business. Hardware revenues in total dropped to $21.3 million, down from $29.5 million in the previous quarter, while average revenue per user (ARPU) for TiVo retail customers dropped from $7.22 in Q3 to $6.95 in the final quarter of the year.
Perhaps more importantly, while subscriber growth improved over the 11,000 net new subs acquired in Q3, and the 3,000 net sub losses in Q2, TiVo still ended the year with fewer than 1 million retail customers all told, this despite the launch of the new TiVo Bolt DVR last fall. (See TiVo Takes Aim With Bolt.)
Luckily for TiVo, the company's service provider business fared significantly better than its retail line. The company said its Q4 service and software revenue from operator customers grew 54% year over year, pushing its annual run rate to approximately $100 million. Subscriber increases were part of that growth, with TiVo adding 318,000 subscribers through operator customers in the fourth quarter, bringing its cumulative number of MSO subscribers to 5.8 million.
In addition to boosting subscriber numbers, TiVo is now seeing gains in the operator market from its acquisition of middleware provider Cubiware in 2015, and content recommendation firm Digitalsmiths in 2014. Key customers for Cubiware products include Columbus Communications Inc. and Cablemás , while critical customers for Digitalsmiths services include Dish Network LLC (Nasdaq: DISH), Charter Communications Inc. and Time Warner Cable Inc. (NYSE: TWC).
In total, TiVo's net revenue for the fourth quarter was $123.1 million, with GAAP net income tallying in at $0.2 million. Roughly speaking, the company broke even for the quarter, although analysts had estimated earnings would increase by a penny per share.
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— Mari Silbey, Senior Editor, Cable/Video, Light Reading