There are now 1.6 million standalone TiVo subscriptions on top of another 2.8 million DirecTV subscribers for a total of approximately 4.4 milllion TiVo subscribers. Over the last three months TiVo added 101,000 gross new TiVo subscribers, but only 16,000 net new TiVo subscribers. TiVo lost $11.1 million for the most recent quarter and are predicting that they will lose anywhere from $33 to $38 million for the next quarter due to an aggressive advertising and rebate program.
Purchases directly from TiVo's own website continued to be strong over the past quarter increasing vs. retail units from 33% to 43% of their business. This is in large part due to a "free" TiVo option available last quarter online but only recently available in retail stores. TiVo has now introduced a rebate based "free" single tuner box option in the retail store for the Holiday Season.
Personally I think the free TiVo offer is kind of lame. First off, it's not really free because you have to pay a monthly service fee and second it's only available on single tuner non high def units, units which are very shortly going to be completely obsolete. People think they are getting something really sexy when they hear the word "TiVo" but really they are getting the junky unit. I can't imagine using a single tuner DVR anymore and anything that doesn't do high def makes me cringe. Then again, of course, you can't always have your 1/2 LB.* Cheesy Bean & Rice Burrito and eat it too.
One of the issues addressed on the call was the now lack of a lifetime purchase option for TiVo consumers. "What we've done now is moved everyone to contract," said Rogers. Adding, "moving away from lifetime was a good thing to do."
Rogers noted that the current prepaid $299 three year option is actually the same price as TiVo's previous lifetime option and said that TiVo is seeing the same level of cash coming from from upfront three year commitments as they did from lifetime sales in the past. Although having to pay monthly for your TiVo three years after buying it is not as good of a deal as it has been in the past, on the plus side for TiVo they now no longer have to worry about unprofitable customers sitting on the books indefinitely.
In the new non lifetime TiVo world, TiVo has three contracts available. You can get monthly service for one year for $19.95 a month, 2 years for $14.95 a month or 3 years for $12.95 per month. There are also prepayment options for all three packages as well.
TiVo said that their most popular offering is currently the three year option. "The most popular plan is the three year prepay plan. The three year prepay plan and the three year monthly are close to a majority of our overall subscriptions at this point," said Rogers.
By cutting off free lifetime service and increasing costs to consumers, TiVo said that they have now been able to move the average price paid by new consumers from $9.50 a month to $13.50 per month, calling this a "very substantial increase."
So what's next for TiVo? A big initiative for TiVo going forward will be integrating broadband online video content with broadcast TV and other content.
"Not a week goes by without some studio or network or internet company providing yet even more video content online," said Rogers. "Tivo is providing one holistic viewing experience." Rogers reiterated his pitch from the past saying that it's not TV unless you watch it on a television.
Rogers talked about new initiatives to allow people to share home movies on their TiVos as well as TiVocast, a new initiative where more and more broadband video content can be put online.
TiVo also continues to cozy up with advertisers in an attempt to turn itself from advertiser pariah to advertiser best friend.
"We did deals with the three major advertising companies to say that we are friend not foe," said Rogers, Adding, "what we do find is that the engagement with us only has more and more momentum."
Rogers talked about a new initiative called "Program Placement" that will allow advertisers the ability to put advertising at the end of a show at the point when users decide to either save or delete a program. Details weren't provided on how this would work or whether they would be optional or compulsory ads, but TiVo's press release on the service mentions Burger King and GM and says that the ads will be for "the viewer who chooses to watch it." Hot Chihuahua! You mean I can actually *choose* to watch a Burger King commercial? No way, man! Cool beans!
TiVo's most exciting product in my opinion, the new dual tuner HDTV Series Three TiVo was almost entirely absent from the call with TiVo only saying that Series Three unit sales "met their expectations."
Rogers talked also about TiVo's latest new deal announced with Cablevision S.A. de C.V., Mexico's largest digital cable operator, TiVo will develop a new service for them similar to the service being built for Comcast and Cox that will allow Cablevision S.A. to offer TiVo service for sale to their customers. Rogers said that they hope to deploy the Calevision service quickly and said to expect to see this mid 2007. I wonder if they can hire that little Taco Bell dog to do some new "Yo Quiero TiVo" ads.
Speaking of Comcast, Analyst Daniel Ernst of Hudson Square Research asked Rogers about the status of the Comcast deal and when we might see the new service in trials and deployed.
Rogers said that the previously announced deal with Comcast is moving along nicely and said that you can expect to see demos of the new Comcast TiVo service coming soon here in January at CES.
Rogers qualified the Comcast rollout as saying that the timing would be up to Comcast but that TiVo would "expect to see some kind of trial (not necessarily a public trial) of our fully developed product sometime this year continuing next year. Our expectation is to see some public deployment early next year," said Rogers. "The excitement level at Comast has only grown." Rogers quoted Comcast's COO stating that Comcast plans, "to market the product so that getting TiVo is an easy decision for our customers."
The rumor on the Comcast rollout is that it has been pushed back to April 1st and that it will cost Comcast customers $5 per month for the TiVo service (about the equivalent of 6 Taco Bell bean burritos per month, depending on where you live... that's a lot of gas).
*Based on average weight. Individual product weights necessarily vary.