TiVo Calling: Vendor Firmly Establishes Itself with the Cable Crowd

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Remember back when MSOs scoffed at the idea of partnering with TiVo? Things have certainly changed with deals being struck with many, most recently Cable One. Unlike Google, which is rumored to be selling the Motorola set-top biz because cable’s not interested in having it in the middle of its business, TiVo has found a way to make it work. "We have been able to insert ourselves by having that consumer facing television behavior understanding coupled with the backend plumbing understanding, and thirdly, not being a threatening force for the cable operator to embrace," said TiVo CEO Tom Rogers during a recent investor conference. "I don’t think we’re believed as being a company that they need to worry about in terms of being strategically at odds with their desire to maintain the relationship with the subscriber as a 3rd party may." JP Morgan sr analyst Paul Coster, who covers applied and emerging technologies, has TiVo as 1 of his top 3 stock picks for Nov (overweight rated and a price target of $13). It hasn’t been all rosy with cable. In Mar, TiVo filed counterclaims against Moto and its customer Time Warner Cable. Jury selection is set to begin Apr 29, according to court documents. TiVo has certainly seen an evolution, with Rogers recalling the amount of skepticism the company has faced over the years. "Going back a couple years, it was, ‘These guys are just about patents, and they don’t have anything to show for it,’ in terms of patent enforcement. Just a case that goes on and on," he said. Now, TiVo has more than $1bln to show for it following settlements with DISH, Verizon and AT&T. On the cable side, TiVo now has arrangements with 9 of the top 21 cable operators. MSO-related service revenue for 3Q climbed 84% YOY to $7.5mln. "Supposedly, big strategics were going to swoop in and provide the cable industry with its answers, and those big strategics have essentially been rejected by the industry," Rogers said. It’s early on in deployment for a lot of these companies, but that leaves a lot of potential upside for TiVo. One partner with a bit of a question mark on it now is Charter, which signed its TiVo deal before Tom Rutledge came on board, and is evaluating CE costs. Rutledge has been publicly supportive of TiVo software, but has "real reservations about the hardware and cap ex path that Charter was on and decided to evaluate what their options were," Rogers said. "Our margins don’t come from hardware. We provide hardware as a way to get MSOs going. Our model is all based on the distribution of the user experience through our software and the per month, per sub fee that it embodies… Charter is still going through its analysis of how to pursue its cap ex program." A Charter spokesperson said Fri that the MSO is no longer deploying TiVo’s boxes but is exploring offering TiVo’s software interface. Up next for TiVo, NFL Jets QB Tim Tebow (his name sounds a lot like TiVo, get it?) as a brand ambassador and the Motorola patent trial.

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