Ever since set-top manufacturer Pace picked up Aurora Networks for $310 million last week, the cable industry has been abuzz over who the company could target next. While speculation is all over the map, Jeff Baumgartner has homed in on two possible acquisition candidates. SeaChange International is one, thanks largely to its video backoffice solutions and advanced advertising technology. TiVo is the other.
There are several reasons why a TiVo purchase (or merger) could make sense. Logically, Pace wants to compete with top dog cable vendors Cisco and Arris, but to do that it needs software solutions for the TV market. Cisco bought NDS for its UI technology last year, and Arris is swimming in guide software between the Moxi assets it picked up from Digeo, and the DreamGallery product it brought in through the purchase of Motorola.
While TiVo is still known as a hardware company, the DVR maker’s business is as much focused on user interface software today as it is on set-top sales. That’s something Pace could use.
Pace has also partnered with TiVo already. Alaskan cable operator GCI rolled out a Pace gateway with the TiVo UI in August, and Mediacom, the eighth largest cable operator in the country, has plans to do the same. Not to mention, at the Cable Show, Dave stumbled upon Pace hardware, running the TiVo experience, and paired with a Charter-branded TiVo remote.
Finally, TiVo has made no secret of its strategy to drive more revenue through the cable market. As of today, the company’s cable subscriptions already account for the largest part of its business. In August, TiVo reported a total of 3.6 million cable subscriber customers.
Common wisdom has it that Pace isn’t done on the M&A front. And TiVo certainly isn’t done with cable. It could be that the two are a perfect match. Adding fuel to the fire… a rumor that company execs held potential tie-up talks at a Florida luxury hotel last month.