TiVo Adds Subscribers in Q3; Lays Out 2012 Priorities

November 22, 2011

TiVo announced its third quarter earnings today exceeding expectations. The good news is that the bleeding of subscribers has stopped. TiVo beat their projected financial numbers and added 117,000 subcribers net this past quarter. Most of the additions were from cable systems rolling out TiVo to their subscribers including Virgin Media (UK), RCN, Suddenlink and ONO (Spain). TiVo has had the most success with Virgin Media adding a total of 220,000 subscribers. The gains from cable providers were offset from continued subscriber losses on the retail side.

TiVo’s shift in strategy to market to cable companies appears to be working. CEO Tom Rogers reaffirmed the company’s commitment to this strategy when he stated TiVo’s priorities for 2012:
  • Execute on existing cable rollouts.
  • Sign new cable deals (acknowledging some are in an advanced stage).
  • Contain costs for R&D as well as litigation.
  • Protect TiVo’s intellectual property: TiVo will continue to “battle-test” its patents through litgation against AT&T, Microsoft and Verizon.
For additional details, see our friend MegaZone’s take on the earnings call as well as CNET’s. Some additional notes of interest from the earnings call:
  • The new DirecTiVo will roll out in selected “major” markets starting this December. Nationwide rollout will start next year with DirecTV being responsible for doing “substantial” marketing.
  • TiVo is working on creating one unified code base for both cable and retail platforms. This will help contain costs and better leverage resources. Personally, I hope this means the BBC iPlayer is coming to the US TiVo.
  • Only a “brief” amount of time was spent on the retail side of the business. The one example cited here was the upcoming Comcast video-on-demand offering about to roll out in San Francisco. No mention was made of the Premiere Elite’s launch.
  • When TiVo rolls out a whole-home solution, each TiVo box in the home will be counted as a subscriber in future counts (both Premieres and Preview boxes will be counted separately).
When TiVo first announced their cable-centric strategy, it was disappointing. Before that, TiVo was a disruptive technology changing how television worked. The new strategy felt like they were giving in and being too accommodating to the cable companies. However, the “if we can’t beat them, let’s join them” strategy seems to be working well. TiVo is providing an advanced TV solution that’s attractive to the cable industry. We get to see TV on our own schedule. Unfortunately, some of that “advanced” solution (streaming services like Netflix) are usually disabled on cable deployments. The other opportunity TiVo highlighted on the call was the alternate advertising outlets the TiVo box provides in place of commercials (remember those?). The cable and advertising opportunity combined with a single code base could create a halo effect eventually revives the retail segment and it’s disruptive potential. However, will it be too late to catch up to the latest wave of low cost streaming boxes and services. 
TiVo Welcome screen. TiVo is regaining some momentum
TiVo has started to regain some momentum

Tags: cable, TiVo

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