Cable Operators

Has TiVo Turned the Corner?

12/05/2011 8:01 AM Eastern

TiVo gave a hearty “cheers!” to U.K.
cable operator Virgin Media after the digital
video recorder company posted its first net
subscriber gains in more than four years.

Reversing the years-long downward spiral,
TiVo gained 117,000 net subs for the quarter ended
Oct. 31, thanks entirely to the rollout of TiVo-based
boxes by Virgin Media. The question is whether
TiVo can keep up the momentum.

The company said it has activity afoot with other big operators:
Charter Communications is expected to launch
TiVo’s Premiere digital video recorders shortly and Direc-
TV will debut DVRs with its software next month in limited
test markets. In addition, TiVo said, deployment rates
at RCN and Suddenlink Communications are accelerating.

Charter, Suddenlink, Grande Communications and
Spain’s ONO collectively represent more than 10 million
homes, which “we now have the ability to reach as an exclusive
or primary [DVR] product offering,” TiVo CEO Tom
Rogers said in announcing the results.

In the most recent quarter, TiVo’s overall subscriber
gains in the period were
all attributable to Virgin
Media. The British MSO
had deployed its TiVo
offering to more than
220,000 subscribers as
of the end of October, up
from 50,000 three months
prior. About 40% of the
MSO’s TiVo subscribers
were new to Virgin Media.

“Our mass deployment efforts are proving successful
and gaining momentum with pay TV operators worldwide,”
Rogers said.

Over the last several years, TiVo has been steadily losing
share as pay TV operators rolled out their own DVR offerings.
In 1999, TiVo struck its original distribution deal with
DirecTV but five years later, the satellite-TV operator said it
would market its own DVR, developed by NDS — leading
to a steady erosion of DirecTV customers using TiVo boxes.

Meanwhile, Comcast and Cox Communications abandoned
plans to introduce TiVo-based DVRs. Instead, both
are shifting to open their VOD services to retail TiVos. Rogers
said Comcast will first offer VOD to TiVo users
in San Francisco.

Also on the earnings call, Rogers touched
on TiVo’s pending patent litigation, noting
that its case against AT&T and Microsoft is expected
to go to trial in Texas federal district
court in January 2012. TiVo also has lawsuits
pending against Verizon Communications
and Motorola.

In May 2011, TiVo reached a $500 million
settlement with Dish Network and EchoStar,
resolving a seven-year-old lawsuit over a key
DVR patent covering simultaneous playback
and storage of recordings.

SUBSCRIBER SWING

TIVO RESULTS FOR THE QUARTER ENDED OCT. 31:

2.04 million total subscriptions, up 117,000 sequentially but
down 10% from 2.27 million a year ago

Subs through TV operators were up 147,000 sequentially to 910,000

“TiVo-owned” subs through retail fell 30,000 to stand at 1.14 million

Revenue climbed 27% to $64.8 million, with a net loss of $24.5 million
(versus a net loss of $20.6 million in the same quarter last year)

SOURCE: Company reports

September