Rovi to Deploy TotalGuide with Half-Dozen Cable Operators
Rovi will deploy its TotalGuide interactive program guide (IPG) with a half-dozen small- and medium-size cable operators in the first half, but it will be a “slow process” that’s not expected to generate “meaningful” revenue until 2014, Rovi Chief Financial Officer Peter Halt said Wednesday at the Piper Jaffray investor conference.
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Armstrong Cable, Buckeye Cable, Blueridge Communications, Cogeco, Mediacom and Suddenlink are the cable operators that will deploy TotalGuideXD, which includes search, metadata and an advertising platform, as a software upgrade to existing set-tops, Halt told us. The operators also are expected to introduce TotalGuideXD, which allows channels to be tuned from a smartphone or tablet. Armstrong has been TotalGuideXD testing for more than a year. The cable operators typically pay about $1 per month per subscriber for TotalGuide and additional 25 cents per month for TotalGuideXD, Halt said.
The initial TotalGuide deployments with cable operators in Q2 “won’t be meaningful,” but will increase as the IPG moves across the networks, Halt said. The six cable operators have about two million subscribers, he said.
"It’s a slow process to get rolled out initially with the cable operators so the real thing to watch from us in 2013 is do we meet our deployment expectations,” Halt said. “They start slowly system by system cable operators at some point will reach a comfort level and ramp up faster. We look at this year as more about getting all the deployments out."
Among the cable operators missing from the initial TotalGuide rollout will be Charter Communications, which had been among its largest potential customers, with about 4.5 million subscribers. Having undergone major changes in management during the past year, Charter is “finishing out what their focus is on,” Halt said. Rovi is in discussions with Charter and “we stay in close contact,” but there’s no deployment agreement, Halt said. Bend and Armstrong will be “lighthouse accounts” for TotalGuide, providing Rovi with “proof points” as it seeks to bring the IPG to other operators, Halt said.
Meanwhile, Rovi is in “active conversations” with “several” buyers for its Rovi Entertainment Store video streaming platform, but hasn’t reached a final deal, Halt said. Rovi abandoned efforts last fall to restructure the business in putting it up for sale. Rovi inherited the video streaming business in buying Sonic Solutions and changed its name to Rovi Entertainment Store from RoxioNow. The streaming platform landed agreements with Best Buy for CinemaNow and also had agreements with Toys R Us and Blockbuster On Demand.
"For the most part applications” like Rovi Entertainment-based services “are not being discovered on connected TVs and Blu-ray players,” Halt said. “We found that with CinemaNow if you put it on a connected TV” like Best Buy did with an Insignia brand set, “no one activates it unless there is call to action” where a retailer provides an incentive like a coupon. “If you want value from the user interface, you need to be working with retail partners and developing a call to action for the consumer so there is a reason for them to explore that real estate,” he said.
Rovi also is continuing to work with CE manufacturers despite having dropped plans for an embedded version of TotalGuide that had found its way into Panasonic, Sharp and Toshiba TVs. Rovi has shifted to “lighter discovery and guidance applications” for CE products (CED Nov 5 p1). Rovi initially targeted having TotalGuide-embedded CE products available in early 2012, but delayed the launch to Q4 before cancelling it.
"The CE side was an area where we didn’t deliver” on the embedded TotalGuide, Halt said. “We developed an idea for TotalGuide that was very exciting, but it took us a couple years to get the product out and in this world if it takes a couple years and it looks exactly like you envisioned before it’s probably not going to be relevant. We came out with a heavy-code embedded guide at a time when everyone was moving into lightweight apps."
In addition to restructuring, Rovi will also lose about $23 million in sales this year as it discontinues a DLNA-related connected platform that generated $8 million in 2012 and as advanced copy protection revenue falls to $15 million from $30 million a year ago, Halt said.
Rovi is banking on DivX Plus streaming technology to produce new revenue when it starts appearing in products later this year. Hisense and LG Electronics have signed agreements to use it in CE products, while retailers Dixons and MediaMarkt are deploying it for video download services. DivX Plus adaptive bitrate streaming broadens a technology first developed for file-based video playback and redesigned with support for H.264, MKV, DTS Audio, 1080p HD, subtitles and multiple audio tracks. In addition to retailers and CE companies, Rovi also is pitching DivX Plus to cable operators.
"The question is can we take DivX Plus and make it a service provider story,” Halt said. “If we do then it belongs in the company. If we don’t, then we have a CE standalone business and we said this past year … that we are not in the business of funding standalone CE business.”