Will TiVo's Partnerships with Comcast and Cox Pay Off?

by: Dave Zatz

Photo by Zandir

As TiVo, Inc (NASDAQ:TIVO) often does, it put out a pair of small news releases to coincide with earnings Monday. First, it announced a business relationship with embedded cable software company Alticast:

“Teaming with Alticast allows global video providers to offer the unique combination of TiVo’s award winning user interface, advertising solutions, and broadband television functionality on set top boxes running Alticast’s industry standard embedded software for ITV applications,” said Joshua Danovitz, Vice President and GM of International at TiVo. “We hear from cable, satellite and IPTV operators around the world that they want better middleware solutions capable of quickly bringing TiVo applications to market and Alticast is in the pole position to fulfill this need. We look forward to their cooperation in making the TiVo experience available on a broad range of platforms, both in the United States and around the world, similar to the way that we have developed platforms for Comcast (NASDAQ:CMCSA) and Cox (CXR).”

Given the speed of TiVo’s Comcast and Cox development (and rollout), it’s not a bad idea to lean on others for assistance, especially those with penetration in foreign environments (both figuratively and literally). However, as a geek gadget blogger, this doesn’t particularly interest me… until they have something to deliver. Related, TiVo announced a second partnership with video-on-demand (VOD) provider SeaChange (NASDAQ:SEAC):

“By teaming with SeaChange we are enabling cable operators without OCAP/tru2way deployment plans to increase the breadth and depth of their offering by quickly deploying TiVo set-top boxes that seamlessly integrate VOD in a single, intuitive TiVo interface,” said Tom Rogers, TiVo’s president and chief executive officer. “This solution also enables participating MSOs to take their on-demand offering to a whole new level by highlighting VOD titles within TiVo universal search results. And the beauty of this is that it can be achieved faster and at a lower cost than most solutions that have been available to cable operators to date.”

Seems like this one’s about empowering smaller or, perhaps, International cable providers to offer and/or profit from TiVo units. Given TiVo’s small, shrinking (see below) footprint and previous rural outreach, I’m not sure this one has legs. We may begin to find out “later this year.”

And then we have the earnings call, itself. No news on additional Comcast deployments, beyond New England. Supposedly Cox trials are going well and the initial rollout is expected to begin in the first half of 2009. TiVo, Inc had a bit more to say on the renewed DirecTV (DTV) initiative:

Additionally, we continue to work on our new DIRECTV HD DVR. The new HD DVR will include popular TiVo broadband features, and will be immediately accessible to DIRECTV’s entire national customer base on day-one of the launch. We have had a very successful history with DIRECTV and those subscribers are some of our most loyal customers.

I gave one of my TiVo contacts a call to dig deeper. Specifically, I’m interested in learning more about the hardware platform, who’s providing it, and if the company is resetting expectations regarding the possibility of a 2009 launch. Unfortunately, TiVo remains tight lipped and I came away with no new or additional info.

As this was an earnings call, the audience is obviously the investment community… and the info TiVo led with was its “First Full Year of Profitability”. That it would have recorded even without the $100+ million EchoStar patent infringement payment. However, these cost savings are a result of continued, reduced marketing expenditures, not new customers. In fact, “TiVo-owned” subscriptions (stand-alone units) remain stagnant while industry-wide DVR penetration continues to expand:

On a net basis, our Tivo owned subscriptions decreased by 4,000 in the fourth quarter and our Tivo owned subscription base ended the quarter at approximately 1.6 million subscriptions.

In addition to ratcheting back outreach and acquisition costs, TiVo should also see some savings from its recent reduction in force (RIF). Plus, it's sitting on a $200+ million cash hoard.

Disclosure: I've never held TiVo, Inc stock and make no recommendations.