Thomas Hawk's TiVo quarterly call summary

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Thomas Hawk's TiVo quarterly call summary

Thomas Hawk has a great wrapup of TiVo's quarterly investor call which includes information on all sorts of TiVo initiatives. It sounds like the Series 3 TiVo won't be coming out until at least this summer and more likely around the holiday shopping season. The lifetime service option is being phased out while the free box in exchange for a higher monthly cost will be phased in. It sounds like the Comcast deal is still moving forward but may be ad supported to some extent. And they continued to downplay the loss of DirecTV.

Not a lot of news in the report as it sounds like they are still grinding away on their current proposed features and rollouts. I really hope TiVo throws some resources behind the series 3 box and pushes it out sooner than later. Just about everyone I know (not just early adopter types like me) keeps asking me when it will be released as it seems everyone is upgrading to HD televisions and wondering why their old tivo looks so blurry compared to their HD cable boxes.

by Matt Haughey March 8, 2006 in News

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I think that there are a lot of ways to look at the DirecTV issue. The business press has been very worried about the loss of this partnership, but the reality is that DirecTV only makes up about 15% of what TiVo takes in. What's also interesting to look at is the updated revenue numbers that they make for each DirecTV subscriber vs. stand alone. They make almost 8 times as much off of each stand alone subscriber.

Comcast can more then replace the lost revenue stream from DirecTV because they not only have more customers, but can also allow customers to instantly download the software instead of purchasing a box. The Comcast partnership also offers TiVo the ability to sell advertising to non-tivo subscribers as well. In other words it doesn't matter if people stick with the generic box because TiVo will profit anyway. In the long run advertising will play a much more lucrative role. TiVo offers companies the ability to create an instant transaction as well as excellent measurability on how ad dollars are spent.

Murdoch has botched the PVR thing from the start. TiVo sold a lot of DirecTV subscriptions in the fourth quarter, weren't those generic PVRs supposed to be out by now. If Murdoch forces his TiVo customers to accept his generic box, then he will quickly find TiVo lovers moving to cable. If TiVo can convince just 15% of DirecTivo subscribers to defect to their stand alone units, then they could actually profit from the loss of this turbulent relationship. In the long run the loss may turn out to be less significant then people make it out to be.

Posted by: davis freeberg at Mar 8, 2006 7:01:23 PM

If TiVo gets rid of the lifetime service option, there might not be another TiVo for me. I already pay ~$90 a month for at home entertainment (cable, dsl and blockbuster online) and at some point, something's got to give. I'm just not home that much. Which is why I have a TiVo in the first place!

Posted by: achmorrison at Mar 8, 2006 9:06:16 PM

How is TiVo going to balance the Comcast deal with the Comcast customers wanting a Series 3 box? It seems like TiVo is sacrificing their own sales and subscribers if every Comcast customer means pennies to TiVo like the DirecTV deal (vs. $13/mo if they got a series3 box).

Posted by: Matt Haughey at Mar 8, 2006 9:07:47 PM

To D. Freeberg,

I feel your pain, between Cell phone, DSL, Land Line, Fax Line, DSL, Dialup for Travel, Blackberry, and half a dozen monthly fees like Basecamp from 37 Signals, I agree that adding a $20 bucks a month TiVo fee feels like insult on top of injury. It makes one think of life on a desert island might be a more relaxing not to mention affordable way to exist on the planet.

But, the difference is that TiVo would probably (After DSL and Cell Phone) be the last thing I'd give up. I can't explain how much better my life got when I enabled 30 Second Skip on my TiVo. No more idiotic adds to sit through. To me that alone is worth $20 bucks...

But the thing that get's me excited, is the fact that eventually my TiVo will serve up a lot more than just my Cable and the occasional RocketBoom 5 minute download. I'm delighted that while SBC is fooling with Fiber installations and everybody is waiting on WiFi TV, TiVo is pushing new exciting content NOW! I am really glad that TiVo is going to allow me some choice beyond what the Cable Company is willing to send my way. With the new Series 3 I'll be able to pull things off over the air High Def, Cable or my Broadband connection.

If I need to pay a little extra to help the company who made commercials a non-issue, make media monopolists scratch their heads (like Rupert Murdoch who seems to go out of his way to make his TiVo users miserable) then I'll pay $30 bucks if it will keep me from having to use some crappy Cable Company DVR.

GO TIVO!

(PS, I really Don't work for TiVo, but I do write a TiVo blog called TiVoToday (http://www.tivotoday.com )

Posted by: GL at Mar 8, 2006 11:55:10 PM

achmorrison,

TiVo would practically give Comcast's 30 Million subscribers the TiVo service for free if they could advertise to those 30 Million viewers. Tivo already has 4.0 Million Subscribers which puts them on par with a small TV Channel. As Comcast comes online and starts to convert users, look for TiVo's bargaining power with Hollywood (Netflix offering), and other content producers to get much stronger.

Posted by: GL at Mar 8, 2006 11:58:52 PM

Matt,

You bring up a good point about managing the mix between stand alone customers and cable customers and honestly I'm not sure how TiVo plans on addressing this issue, but they have given a couple of hints. First off, it's possible that the Comcast box won't have all of the functionality that TiVo wants to offer. Limitations with the hardware could prevent upgrades. Personally, I only get 14 hours of HDTV recording on my Motorola box and I'm looking forward to the series 3 coming out just so that I can not only send it to weaknees but also so I can buy an external drive. This is a differentiator and could encourage customers to pay a bit more. I think it's also worth considering that there are about 50 million analog TV connections out there and about half of TiVo's subscribers are analog customers. This doesn't guarantee that we'll see 1 out of the 8 DirecTV subscribers move to analog, but it does show that there is still healthy demand for analog services. This might be going away over the next few years, but in the near term there are a lot of people who would benefit a lot from using an S2 TiVo and an analog connection. I know that when I first got my TiVo, I disconnected my cable and ran off an OTA arrangement for some time. I found that with TiVo I didn't need 100 channels and that by not paying $40 a month, TiVo was actually saving me money. Not everyone will do this of course, but certainly some DirecTV customers will use the loss of TiVo as an excuse to change how they get their TV.

Let's assume though that they get one out of 16 customers to transfer to a standalone box and one out of 8 to go to cable. This would still create a situation where the company would only lose maybe $10 million from the loss of DTV. Considering that the company said they were in active negotiations with other cable companies and that they are in development on TGC (TiVo Greater China), I'd rather see them focus on these deals then to have to work with an uncooperative parnter. I'm not saying that the loss of DirecTV won't be felt, but merely that we are taking about maybe 5% of their revenue in the grand scheme of things. Hardly, something that will make or break TiVo's future.

Posted by: Davis Freeberg at Mar 9, 2006 7:51:03 AM

Having recently added HD
I would buy a Tivo 3, but if it can not record composite input or HDMI. I can't use it, so I don't want one.

Posted by: Robert at Mar 10, 2006 6:58:21 AM

Thomas Hawk's TiVo quarterly call summary

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