TiVo's rebound

Five years ago, I wrote a post here called TiVo's Apple Problem. I looked at the current state of TiVo and wondered if they would be much like Apple was at the time (Apple has since gained much more mainstream appeal and higher sales), which was to say it would be a high-end product used by a small number of people and that things like cable company DVRs offered for free would dominate the space.

Off and on for the past six years I've been an armchair quarterback for TiVo telling them they should do anything and everything to become profitable, among other things: they should offer pay-per-view downloads (I asked for this in 2002), they should broker deals with cable companies, that they should release software for PCs, that they should move to international markets, and that while I'm not a fan of software patents in general I feel the TiVo patents are original and worth fighting.

What I realized this week is that TiVo has spent the past couple years starting battles on all these fronts, and it looks like (at least to this outside observer) like TiVo is winning on all fronts. Even as their CEO admits more people are using DVRs and skipping lots of ads, I'd say TiVo is doing well.

They released Amazon Unbox last year and are working on plans for HD downloads. They recently released branded PC software that lets you run a TiVo-like app on your media PC. They won the Dish Network patent battle and received not only $104 million in payout, but there are rumors that Dish Network will license parts of the TiVo experience they copied. DirecTV and TiVo have announced plans to work together again on a new HD DirecTiVo combo unit. TiVo got introduced into Canada last year and Australia this past summer. In the past year TiVo-branded units began rolling out to Comcast customers.

When you add it all up, TiVo is doing pretty well on all fronts -- 27% of homes in the US have a DVR now, and that number keeps increasing every time they run the survey (it was 22% last year). With TiVo available for all cable systems (including HD), available soon on DirecTV, and for some Comcast customers, and also available on your PC, there is a good chance TiVo the company could stand to increase their revenue as more and more people adopt DVRs into their homes and busy schedules.

I've given TiVo plenty of knocks over the past few years as it seemed the software wasn't improving, the service was too expensive, and it didn't seem like TiVo was going after every market it could. But I have to say in 2008, they've really turned it around and seem to be gaining on all possible revenue fronts. I've had a TiVo for eight years now and it has changed my life in that time, giving me back hours every week I would have spent on the couch channel surfing or staying at home in time to watch something. The financial health of TiVo is important to the continued development of the product as well as my ability to enjoy it, so I'm very interested in how the company is growing. I have to say it looks like they are doing well and have laid the groundwork for a prosperous future.

Comments

[Erik]

Good news about Tivo getting back on track. I do not know what I'd do without my Tivo.

[Bob]

I'm still using my old Replay 5040's. Once you use a Tivo or Replay anything else offered by cableco's or satellite just falls short.

[Jeff G]

Ok. Youtube is here for Tivo. Where's Hulu?

[Matt Haughey]

Yeah, if hulu worked on TiVo, that'd be a big win. I'm guessing there's a fight between AppleTV and Tivo to get the rights to hulu playback.

[Bill G]

Matt, I've always thought that TiVo had a fine product, and their recent court victories will make sure they have plenty of cash in the bank, and likely legally protected IP going forward, but unless they can convert that IP into an ongoing income stream they have no business going forward.

You cite the fact that 27% of homes in the US have a DVR, that's true. Based on Nielsen numbers those 27% of homes have 36.4 million DVRs as of July, 2008. But fewer than 4m of them are TiVo branded.

http://tvbythenumbers.com/2008/07/17/over-36-million-dvrs-in-us-homes-july-2008/4453

As far as "turned it around", TiVo had about the same number of subscribers in July, 2008 as it had in July, 2005. Zero net growth in 3 years while the US as a whole added tens of millions of DVR subscribers.

http://tvbythenumbers.com/2008/08/27/quarterly-net-new-tivo-subscribers-2001-july-2008/4806

Good product. Well known name. Perhaps valuable IP going forward. No business at all currently.

[Matt Haughey]

Well, Bill G, the subscriber numbers in 2005 included a lot (a million?) DirecTV users that are no longer counted.

I still contend if TiVo gets DirecTV, Dish, Comcast, and PC users on board, they stand a chance to really start gaining some revenue and users.

[Dave Zatz]

Their core problem is what it's always been - getting the word out. Why is a stand-alone TiVo better than a cable-co DVR? Obviously deals with Comcast and Cox (plus DirecTV) could ultimately remove this problem. And don't forget their penetration in Australia and Mexico. Plus, I expect more international expansion.

Regarding Bill's comment, you don't need to be the market leader to be a profitable business. Think Apple in the computer industry - small percentage, but huge mindshare and stellar revenue.

[Lostinspace]

Great article!

I have a Tivo/DVR but rarely use it now. Instead I watch the shows I missed over the internet from the local stations.