TiVo’s Earnings Call – A Solid Quarter, and DirecTiVo in December

I listened in to TiVo’s earnings call this afternoon, and read through the release and 8-K, and the three points that interest me the most are:

• DirecTV will finally release the new THR22 DirecTiVo in “early December”.
• Charter will be launching retail “very soon”.
• Comcast OnDemand support is in field trials now.

I think the DirecTiVo news is the most anticipated, so in TiVo’s own words:

Additionally, DirecTV has informed us that they intend to initiate the launch of the TiVo-DIRECTV product in select markets in December with a nationwide rollout to follow early next year.

Still, don’t set your expectations too high. We know the new DirecTiVo is based on the old HR22 DVR and it will lack a number of features found in the current DirecTV DVRs. DirecTV really doesn’t seem to want to release it, but they’re obligated to do so. They’re clearly focused on their in-house units with their five-tuner DVR, new HD UI, and whole-home support.

In other news, TiVo has had their first increase in total subscriptions in four years – adding 117,000 subscribers compared to a 33,000 loss last quarter. This is mainly thanks to Virgin Media’s runaway success, but also growth from RCN & Suddenlink. With ONO, Grande Communications, and Charter coming online, and the new DirecTiVo finally shipping, the MSO subscribers will become even more significant going forward. And TiVo indicated further MSO deals are pending, with TiVo having responded to several Request for Proposals.

Conversely, the retail side continues to slide. They added 30,000 new subscribers, but lost 60,000 old ones – for a 30k net loss. MSOs actually added 147,000 – the lower 117,000 net add is due to this loss. The good news is the new subscribers are worth more to TiVo as the higher monthly fees increase revenue per customer. If & when Comcast launches VOD support on TiVo and provides some marketing and free installations, as promised, it may help the retail numbers. But it seems clear the MSO side of the house is going to be the real growth engine.

Oh, there was one other interesting point. Rogers mentioned that most of TiVo’s development now serves both MSO & retail. They’re building a common code base for all platforms, MSO and retail, to better leverage their R&D spending. In the past the two sides operated pretty much independently. Remember the soft-TiVo product for Comcast & Cox was a completely new Java code base. While retail boxes remained on the conventional development path. Now MSO & retail units will be running common, if not identical, software and hardware will also be shared.

We’re already seeing that with the TiVo Premiere Q for MSOs and TiVo Premiere Elite for retail. It is basically the same box with a different hard drive capacity. And the 14.x software used by MSOs, such as RCN, and the retail units is from a common base. This means that any feature TiVo develops can be released to retail and offered to their MSO partners simultaneously – contractual issues permitting of course. (See Netflix being unavailable on MSO units.) It is also makes things more efficient, you don’t need two development teams both implementing the same thing on different platforms. Even the software for Virgin Media and ONO, which runs on third party hardware, appears to be from the common code base.

One thing I was hoping to hear, but didn’t, was news on the TiVo Preview coming to retail. I really want this and it is annoying that it is available to MSOs but not retail. It is the perfect companion to the TiVo Premiere Elite.

Overall though, I thought it was a pretty good quarter.