Apple, after shunning cable operators for years and trying to cobble together its own subscription TV service, is now rumored to be wooing MSOs with some kind of snazzy set-top (see Apple In Talks With TWC, Other MSOs On Cable Set-Top: Report).
What are Apple’s chances of success? It’s instructive to look at TiVo’s track record: The company has spent a decade cajoling pay TV operators to offer its DVRs to customers, or threatening them with patent litigation. It also has persistently lobbied the FCC to force MSOs to let retail TiVo boxes access programming.
After years of breaking its teeth, what does TiVo have to show for it on the bottom line?
Bupkis. Actually, less than that — in the U.S., TiVo is still losing subscribers.
TiVo has managed to land deals with Charter Communications, Suddenlink Communications, RCN and Grande Communications. But so far, those MSOs haven’t contributed enough new subs to offset declines in retail and from TiVo’s legacy deal with DirecTV.
U.K. cable operator Virgin Media has accounted for the turnaround in TiVo’s subscriber growth. TiVo lost a net 29,000 retail subscribers for the quarter ended April 30, while adding 242,000 through Virgin — but dropping a net 7,000 from all other operators (see TiVo’s Growth Stays In Virgin Territory).
Early on, “We were flatly rejected by the cable industry when it came to the DVR,” TiVo CEO Tom Rogers said at the TV 3.0 event in June. But now, with some operators, “We’ve kind of been called back into action. We very much have allied our future with theirs.”
So TiVo, whose future depends on set-top deals with MSOs, has yet to turn the corner on this strategy in the States.
Would Apple fare better? TiVo has a pretty good user interface, offers access to tons of over-the-top content and cable VOD, a four-tuner DVR option and has a second-screen remote app for iPad.
It’s not obvious what kind of magical new capability Apple could offer in a set-top that would make it unusually compelling to MSOs (Siri voice recognition perhaps?). And dealing with Apple could be risky for operators, given its vertically integrated model in which it controls everything — hardware, software, UI, apps and content transactions.
On the other hand, Apple is more than 500 times bigger than TiVo, by market cap. And while TiVo has name recognition (it’s a verb!), Apple has the most powerful brand in consumer technologies.
So, maybe the Cupertino Magic Factory can swoop in to the cable set-top market and get some big wins. But it certainly wouldn’t be an overnight success.