Rovi to Spend $23-$27 Million on New Product Initiatives This Year
Rovi will spend $23-$27 million on new product initiatives this year as it expands the geographic reach of its metadata services and launches a cloud-based platform to meet customer demand for a “lighter” interactive program guide, Rovi CEO Thomas Carson said on an earnings call.
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Rovi worked for years to deploy its TotalGuide IPG with cable set-tops and CE products, but cable operators are seeking a “lighter product they can more easily integrate with other services,” Carson said. The change in TotalGuide strategy follows Rovi’s restructuring into product-focused business groups, including sectors for set-tops, metadata, analytic and lifecycle services, Carson said. Rovi scrapped plans for an embedded version of TotalGuide for CE products in late 2012 (CED Nov 5/12 p1) in cutting 127 jobs.
"In this structure, the business group leads are responsible for driving growth and innovation,” and they're “accountable for the financial contribution of the respected groups,” Carson said. “They now have the resources in place to do just that."
The cloud-based IPG platform will be deployed later this year with America Movil, the Mexican mobile network operator, and will consume about half the $23-$27 million Rovi expects to spend on new product initiatives this year, Carson said. America Movil also used Rovi’s Passport IPG, as well as xD, software that allows channels to be tuned from a smartphone or tablet. Armstrong Cable and Bend Broadband are among the cable operators that began testing xD in 2012 and Rovi expects it to land xD agreements with another 6-10 companies this year, Carson said. Buckeye Cable, Blue Ridge Communications, Cogeco, Mediacom and Suddenlink are among the operators that previously had xD pacts with Rovi. With xD, Rovi receives an IP license fee “north of” 25 cents per household that downloads it, said Rovi Chief Financial Officer Peter Halt.
Rovi also will spend about 25 percent of funding allocated for new products this year on expanding its metadata services in Asia, moving its reach into 15 additional countries, Carson said. Those services are available in 55 countries and Rovi will recoup the investment on the new expansion within three years, Carson said. The metadata is drawn from Rovi’s acquisitions of All Media Guide and Muze, both of which were originally positioned as part of the company’s media cloud data services pitched for smart TV platforms (CED Feb 17/11 p1).
Rovi expects to complete a deal for its DivX and MainConcept businesses by Q2, having hired Wells Fargo to help sort through offers from “quite a few different people,” Halt said. Rovi has said it would weigh partnerships or sale of the businesses (CED Dec 12 p3). Rovi acquired DivX and MainConcept when it bought Sonic Solutions. DivX compression has been revamped to support H.264, MKV, DTS Audio, 1080p HD, subtitles and multiple audio tracks. DivX Plus Streaming also has been licensed for over-the-top video services, including those offered by Dixons and Sainsbury’s in the U.K. MainConcept, which DivX bought when it was an independent company, develops video codecs.
Rovi had a $60.8 million Q4 net loss vs. a $2.1 million profit a year earlier despite revenue rising to $152.3 million from $132.6 million, the company said. Rovi’s Q4 revenue benefited from new “second screen” licensing agreements signed in the quarter with Samsung and Google, in addition to America Movil, the company said.