TiVo may have disappointed the Wall Street analysts yesterday, but that hasn’t stopped the company from moving ahead with several important inititives for the company. On their conference call discussing third quarter results, one of the themes that TiVo stressed was that many were too focused on the domestic markets for TiVo’s service and weren’t looking closely enough at the international opportunities.
To say that TiVo has struggled to get cable deals in the US is an understatement. While relatively early on, they were able to score a deal with DirecTV that netted impressive subscriber growth, they were never able to get very high royalties from them and when the deal ended, DirecTV still choose to go with NDS for their PVR solution.
Early on TiVo tried to play nice with the Dish Networks, but rather then licensing TiVo’s software, Dish choose to steal TiVo’s technology and then fight tooth and nail in a patent fight over the technology.
Two of the bright spots that TiVo has seen in the cable industry have been their deals with Comcast and Cox that are set to be rolled out in the first half of next year. While these deals should be highly profitable from a gross margin perspective, they did have to grant Comcast and Cox most favored partner status, if another cable operator is later able to forge a better deal.
TiVo scored a major victory in their licensing negotiations when theyetched out a deal with the National Cable Television Cooperative, but because the NCTC’s customer base is spread out, it makes marketing the TiVo software to their partners a tad difficult. While they have already seen a few independent cable operators come on board from the deal, they still haven’t made significant progress since the deal was announced a year ago.
TiVo’s most friendly cable partnership to date has probably been with Cablevision, who has been selling standalone TiVo boxes beside their own Scientific-Atlantic boxes.
With so many problems gaining traction in the US cable market, it’s no surprise that TiVo is looking towards international partnerships to help them grow. Their early early launch into the UK may have been a failure, but even today there are still many UK subscribers using the service. Since then TiVo has looked towards Canada for growth and currently there is a strong underground in Austrailia, where electronic programing guides have been made illegal.
Hot on the heels of a their most recent announcement to offer Tivo boxes and service to Mexico based Cablevision, S.A. de C.V., Digitimes is now reporting that TiVo’s Asia Marketing agent has said that the company has signed a cable deal with Eastern Multimedia, Taiwan’s largest cable operator. Currently, Eastern Multimedia has an almost 25% market share in Taiwan representing a little over a million customers. While this deal is certain to bolster the prospects of TiVo’s TGC inititives, it is just as likely to be seen as a set back for OpenTV, who just two years ago had signed a contract with Eastern Multimedia to provide their own iTV solution.
Interestingly enough, as part of the Eastern Multimedia deal, TiVo will not only be providing DVR software, but will also be offering internet access for $28 a month. Bundling these two services together makes a lot of sense. TiVo’s future is becoming more and more dependent on their ability to deliver content over broadband and considering that they see a sharp uptake in consumer satisfaction when subscribers have their TiVo boxes connected to the internet via broadband instead of dial up, it makes a lot of sense to bundle the two services together. While I don’t expect that TiVo is going to let US subscribers use their boxes to surf the internet anytime soon, the rollout with Eastern Multimedia could provide valuable data as to whether or not consumers really do want this functionality.
With TiVo having already scored a deal with BellSouth to help market their DMRs in the US, it’s not a big strech to see them expand their current bundle of DSL for $15 a month with a $13 TiVo subscription andoffer US consumers a similar service. While the company has steadfastly said that consumers don’t want to surf the internet from the TV, if they were to offer this service domestically, it would give them one more way that they could differentiate their DMR service.
“TiVo’s best cable partner to date has probably been Cablevision. They are not only planning on deploying TiVo’s own set top boxes on the Motorola hardware boxes that TiVo is building software for, but they’ve also been selling standalone TiVo boxes to their subscribers in the meantime.”
Dave, Cablevision is not rolling out the TIVO software on MOT boxes, I think you meant Comcast. Cablevision is on the SFA platform. Cablevision did distribute the standalone box for TIVO but it was a very limited experiment. I am not sure if it is being done today. The way the standalone sub growth is going it doesn’t look like it.
NJD – Thanks for the insight. I totally got this wrong. I should have double checked the original announcement before hitting publish. I’ve gone ahead and amended the article to remove the incorrect statement and to replace it with a more accurate description of their relationship with Cablevision. Thanks for adding to the conversation.