TiVo Readying Cloud-Based Platform for Cable, Satellite Operators
Swedish cable operator Com Hem will deploy a cloud-based TiVo platform as part of its IPTV network during the “next few quarters” as a possible precursor to TiVo introducing it in the U.S., said Naveen Chopra, senior vice president-corporate development and strategy, on an earnings call. The proposed cloud service, which has “some” U.S. customers, will support “a number of devices” when it launches and “will expand from there,” Chopra said. Chopra didn’t disclose the timing for introducing a U.S. service.
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The cloud platform will expand TiVo from cable and satellite operators that deploy its DVR hardware and software to potential customers that want full IPTV without a set-top box, TiVo CEO Thomas Rogers said. It also could be used for a partial IPTV deployment designed around TV Everywhere products, he said. Con Hem is developing a full IPTV system, which is “something we are actively engaged in for operators today who choose to go to that level of IPTV delivery,” Rogers said.
TiVo executives didn’t identify the U.S. operators that might add the cloud-based service. But TiVo’s deployment of its Premiere DVRs with Charter Communications has been on hold since introduction in the Fort Worth, Texas, market earlier this year. The delay coincided with the arrival of new Charter CEO Thomas Rutledge and the companies have since focused on bringing TiVo software to future set-top boxes and potentially existing models, Rogers said. “This is in addition to extending the TiVo user interface to possible future Charter offerings that go beyond the set-top box to any device via the cloud,” Rogers said.
At the same time, TiVo expanded distribution of its Premiere set-top with Comcast to the Boston market and will add Denver, Portland, Ore., and Sacramento, Calif., Rogers said. Comcast launched TiVo Premiere DVRs at retail in San Francisco last year pre-loaded with the cable operator’s Xfinity on Demand, but had been expected to extend distribution last fall. The new Boston deployment with Comcast brings TiVo back to a market where it first tested downloading software to Motorola set-tops four years ago. The 2008 test ran into infrastructure “instability” in getting the service to customer homes.
Meanwhile, TiVo’s patent infringement trial against Verizon is expected to start Oct. 1 with jury selection, TiVo General Counsel Matthew Zinn said. TiVo’s Q2 operating expenses included $12.8 million in legal costs, most of it tied to the Verizon case. The case, which involves Verizon’s alleged infringement of TiVo’s “time warp” patent -- a method for recording one program while watching another one -- previously was expected to go to trial in November. TiVo legal expenses will further increase in Q3, Zinn said. Cisco sued TiVo in May in U.S. District Court, San Jose, Calif., seeking to have the time-warp patent found invalid. That case was transferred to U.S. District Court, Texarcana, Texas, where a similar suit is pending against Motorola. The Motorola suit is scheduled for trial in May, while the Cisco case is due late the same year, Zinn said. Time Warner Cable, which buys set-tops from Cisco and Motorola, is a defendant in both cases, Zinn said.
TiVo’s Q2 net loss widened to $27.7 million from $19.5 million as operating expenses jumped to $64.6 million from $53.2 million. Revenue improved to $65.2 million from $61.1 million. TiVo-owned subscriber revenue slipped to $26.9 million from $29.6 million as the number of standalone TiVo customers slipped to one million from 1.88 million a year earlier, despite an improvement in monthly churn to 1.6 percent from 1.9 percent. TiVo-owned average revenue per user (ARPU) grew to $8.42 from $8.31. Cable and satellite operator-related revenue increased to $5.3 million from $4.3 million as ARPU dropped to $1.15 from $1.94. The number of TiVo’s cable and satellite subscribers increased to 1.65 million from 763,000, driven largely by Virgin Media, which recently hit the one million subscriber mark. Customers added through Comcast are counted as TiVo-owned subscribers, company officials said. TiVo’s total subscribers jumped to 2.71 million from 1.92 million. Total service revenue declined to $32.3 million from $34 million, while those from technology grew to $21.8 million from $15.5 million. Hardware sales declined to $11.1 million from $11.5 million.
While TiVo’s service is available through DirecTV nationwide, it is an “optional” platform, unlike earlier distribution where it was built into satellite receivers, Chopra said. DirecTV developed its own DVR platform. “We're not the primary platform that DirecTV pushes, and we recognize that that will have some impact on the kind of sub growth that we see there,” Chopra said. “But the economics of the deal continue to be very attractive to us.”