TiVo Still Shedding DVR Users

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TiVo has racked up notable wins with cable operators recently, but the DVR pioneer continues to bleed subscribers -- losing 125,000 in the three months ended July 31 -- and the company expects to post another net loss for the current quarter.

The vendor had 1.37 million "TiVo-owned" subscribers as of July 31, down 13.7% year over year, and 1.02 million customers through cable and satellite TV operators including DirecTV and Comcast, down 30.7%. Overall, TiVo had 2.38 million subs at the end of the period, versus 3.05 million in July 2009.

TiVo's overall revenue of $51.6 million was down 10.5% year over year and the company's net loss widened to $15.3 million, compared with a net loss of $2.7 million in the year-ago quarter.

However, according to TiVo president and CEO Tom Rogers, the company "remains on solid financial footing, exceeding our revenue and earnings guidance and with a strong balance sheet of over $240 million in cash and short-term investments, and no debt."

Added Rogers, in announcing the earnings, "We are confident in our ability to drive the distribution of our products and are investing in our ability to do so now, as well as for future generation products."

For the third quarter of its fiscal 2011, TiVo anticipates service and technology revenues in the range of $40 million to $42 million, a net loss of between $19 million to $21 million.

TiVo is still suffering the effects of DirecTV's decision in 2004 to market its own DVR, developed by NDS, after the satellite operator offered TiVo DVRs to subscribers for five years. Meanwhile, the percentage of TiVo-owned subscribers paying 

recurring fees dropped to 56%, versus 59% in the year-ago period. Of those 1.37 million customers, approximately 280,000 are "lifetime" subscribers that have reached the end of the period TiVo uses to recognize lifetime subscription revenue.

TiVo's recent deals, including a new one with DirecTV for an HD DVR that is still in the works, haven't been enough to offset that.

In the U.S., TiVo has signed distribution deals with RCN and Suddenlink Communications to offer its Premiere DVR to their respective customers. Meanwhile, the company modified its partnership with Cox Communications, which plans to actively support and market TiVo DVRs, as well as open access to its video-on-demand services to TiVo.

Regarding TiVo's ongoing patent litigation against EchoStar and Dish Network, which is pending before the full court of the U.S. Court of Appeals for the Federal Circuit, Rogers said, "We continue to believe that TiVo will prevail as we have throughout the litigation. We look forward to presenting our arguments to the en banc panel soon and remain confident that the rights of patents holders and judges to enforce an injunction against a willful infringer will be upheld."

Separately Wednesday, TiVo announced that it will enhance its StopWatch ratings service to include the ability to determine what percentage of its DVR users exposed to a program promo ultimately tuned in to watch it. The feature will be available beginning next month.

Also, TiVo announced a marketing partnership with the NASDAQ OMX Group to bring "enhanced visual elements," including the TiVo brand and user interface, to the exchange's MarketSite Video Wall located in New York City's Times Square. The parties said specific details of will be disclosed in the coming months.

"This relationship is intended to help improve the visual look and feel of one of the financial world's most recognizable landmarks, utilizing the well-known TiVo brand," Rogers commented.

Earlier this week, the company announced the $90 TiVo Slide remote, which includes a slide-out full QWERTY keyboard.

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