TiVo is Dead. Long Live TiVo!

Patent Trollvi rises…

Yes, the leaks were true. Rovi intends to purchase TiVo.

While TiVo creates amazing products and has successfully deployed their solution to numerous cable operators around the world, beyond patent litigation and licensing, they haven’t found much financial success. Basically, the writing was on the wall.

TiVo’s $1.1b purchase price isn’t quite as attractive as it appears… as the company’s sitting on about $500m of cash, after debt, according their latest call. Although, at potentially $10.70/share, it’s certainly a nice premium over the $8 they’ve been trading around much of the year. And Rovi clearly sees value in TiVo’s patent portfolio, beyond the soon-to-expire Time Warp tent-pole, including the active litigation against Samsung:

Together, Rovi and TiVo have worldwide portfolios of over 6,000 issued patents and pending applications worldwide. Both Rovi and TiVo have been successful in monetizing their innovations and intellectual property, with more than $3 billion in combined IP licensing revenues and past damage awards. TiVo’s IP assets, combined with Rovi’s recent OTT partnership with Intellectual Ventures, further strengthens the company’s collective position as a leading provider of intellectual property in media and entertainment discovery

So what’s next for us? Rovi indicates everything’s gonna be alright.

Despite the reassurance, I remain cautiously pessimistic ;) for a whole host of reasons related to Rovi’s business and TiVo’s ineffective retail execution… as evidenced by a largely stagnant retail subscriber count that mirrors 2007 numbers… despite padding the stats with TiVo Mini whole home extenders. But, while resurrecting a discontinued product with an inferior feature set may be seen as a misstep, it’s a surprisingly nice pivot for a cost conscious audience given what I know of the seemingly shelved Bolt OTA Aereo Edition.

In any event, deals like these take time to close and even longer to consummate. As such, I can’t imagine any widespread retail TiVo changes within the next year. At least none that weren’t already planned. So, if a new pro-level TiVo and other unidentified non-DVR hardware were (still) in play this week, they’ll remain in play for the near term. Whether or not you’re comfortable making a purchase, when the time comes, will be the question (that I will help you answer). On the service side, I expect our subscriptions to be safe for a long, long while. As in years. However, if or as the company de-emphasizes retail, software bug fixes, app development, SkipMode, etc are the sorts of things that would fall by the wayside.

The merged company will go by “TiVo” and the transaction is expected to be completed Q3. Good luck to us.

44 thoughts on “TiVo is Dead. Long Live TiVo!”

  1. Biggest concern for me with this merger will be guide data. Rovi’s guide data isn’t really up to the same quality that is provided by TMS (I think that is the name they go by) now.

  2. Supposedly their guide contract was up this year. Not sure if they have enough time to integrate Rovi’s data right away, if that change was already in play, or if the existing data contract/partner had been extended for awhile longer.

  3. A good start for TiVo to regain market relevance would’ve been years ago to do away with the guide subscription fees. Use to have one, thought it was a nice product — eventually gave it away and never upgraded. Cable rates are high enough, no need to heap more money on top.

  4. I think if (when?) TiVo products bite the dust I will make the switch to Dish as hopper appears to be the best of the bunch right now unless Verizon makes some huge improvements to their interface or OTT services can fill the void they currently can’t for my viewing habits.

    I have no choices for service other than Satellite as the only other carrier in my area Atlantic Broadband doesn’t service my neighborhood and they use TiVo anyway so whatever they come up with as a replacement I assume will be way behind their competitors.

  5. I’d like to be the Rovi guy who audits Tivo’s R&D spending.

    For the past decade they’ve spent $100 million a year in “R&D” and have neeeeever accounted for it in product or service, consumer or B2B.

  6. Tivo loaded in my home, hoping to get another 3-5 years out of them. Hoping the EPG data doesn’t suffer. If Tivo circles the drain on retail support, may have to go a single X1 and Roku units. Multi room Dish is too high in lease fees.

  7. Another Mike, well we know some of the R&D is related to this cloud DVR service and infrastructure that none of their partners seem interested in. Also, sources relayed info on multiple projects on the shelf – for example, the TiVo Stream idea was developed YEARS before they decided to release it, the MIA voice control, and the TiVo Mega RAID that failed to ship. How that adds up to $100m, I have no idea. So, yeah, doesn’t sound like they managed resources super well (despite never enough software developers to finish the HDUI) – and partially accounts for the recent engineer layoffs as they prepared for sale. Oh, there’s so much I could say… especially on the marketing side of the house these last few years. Rovi should have flown me in for some overpriced briefings. ;) Not that it’d matter, as the patent portfolio appears to be the crown jewel. At least until tested in court or re-reviewed by the USPTO. I assume they are well aware that TiVo’s biggest customer (Virgin) is a risky long term prospect as their parent company makes DVRs.

    By the by, while we consumers can take a wait and see approach, I’d encourage TiVo engineers to polish up their resumes and get the heck out of Dodge on their own timeline. I empathize, having been there – a couple of my prior employers were acquired.

  8. Maybe they will now finally complete the HDUI? I hate it when things switch to the SDUI screen on my Bolts.

  9. I agree Dave. I think DVRs move to the cloud. Cable cards bite the dust with all you video going IP. Set top boxes will be your streaming box or casting from a tablet (which Google and Vizio seem to believe in).

    Data caps will be the weapon of choice for cable guys to protect their turf… Sure you can buy your channels OTT, but you will pay up for the data plan and it will be throttled. Your local cable guy will waive data caps on video subscription from them. And yes, you can bring your own device instead of rent, but if you want a DVR experience you will pay $10 or $15 a month for the privilege.

  10. Sorry, gang, but IMHO, the plan is for Rovi to make us think all is well for quite some time to avoid immediate anger and backlash before the deal is sealed. However, IMHO, Rovi will shutter its retail by close of deal in a few quarters, and most likely kill the money losing hardware part of TiVo. This is not only Rovi’s vision (of not being a hardware company), but was former CEO Tom Rogers stated plan for TiVo: to take to being a SOFTWARE company and getting out of the, presumably, capital intensive and very expensive hardware and retail business. It would also make Rovi a far better or attractive competitor to the virtually unchallenged Gracenote who have all the biggest EPG data accounts including both DirecTV and Dish.

    None of what I believe is unprecedented. In fact, it is shockingly common in many mergers of this type. Rovi wants and needs some of TiVo’s great tech on search and more as it relates to enhancing Rovi’s current business as a provider of EPG and guide data. That is Rovi’s business, and I can’t see them keeping the money losing costs of the hardware end. I also believe that once the deal closes, Rovi, who has a history of abandoning its users, will send us the Sezmi DVR email announcing that our DVR’s will be bricks and mighty fine doorstops. The idea for any company is to MAKE money, not keep spending it on services with not great returns such as maintaining what it takes to keep current TiVo DVR’s still functioning as DVR’s. And Rovi has no one to offend as their product is going to be a part of whatever service or hardware you manage to invest for watching content.

    I know no one wants to hear what I’ve put forward, but let’s try not to be DEFENSIVE nor apologists for any company in our reactions to the news. While things could go more in the positive direction such as Rovi standing behind all the retail TiVo’s for a few years, that is highly unlikely given the fact that we are talking about Rovi and its own history.

    Well, I guess the CM DVR+ may be gracing my home by years end. I hope for the best, but I won’t fool myself into believing only the best, but seriously consider the worst.

  11. Dave, Thank you for your coverage of all things TiVo.

    Dan, I think your right about the end cost of being a cord trimming OTT customer of the the telcos.

    HarryKerryJr, I think you nailed it. I’ll just run my Roamio until they turn off the program guide or the hard drive fails.

    Now I HAVE to figure out how to build a Mac Mini DVR.

  12. This merger is a good fit and I think a big reason is TiVo’s retail presence.

    Sure, TiVo has always wanted to be a software/services company, and the hardware has always been a means to that end. But Rovi is in the same business, but never made the commitment to hardware. Retail hardware doesn’t have be be cash flow positive to provide a good return on investment. It provides the company a proving ground for new features, as well as great marketing.

    The basic idea is to show your customers it will work and that people like it. I expect to see many of Rovi’s interface features and ideas show up in retail TiVo hardware with the hopes they’ll be able to sell it to cable co’s.

    I’m very optimistic about this merger, can’t wait to see where it goes.

  13. I hope you’re right, Ben. I also hope they can retain or acquire the right staff to see that vision through, should they run with that idea long term. I’d heard thru the grapevine that some folks started looking for new homes when the first leak hit (coincidentally/suspiciously/ironically on TiVo’s honorary Blue Moon day off, no less).

    The size and speed of any exodus will partially depend upon how generous TiVo has been with stock grants, options, etc along with their valuations and vesting periods. Startups generally retain more folks, longer than when a publicly traded company is acquired in this fashion as there’s more money on the table. Startups are also much leaner and each defection is more painful than a larger company that can absorb the loss. Not to mention TiVo outsources a decent amount of work.

  14. When I bought my first TiVo in 2006, I thought it would be the only TiVo I bought. Apple had just started selling TV shows on iTunes and I was convinced it’d only be a few years before I canceled my cable service.

    When I bought my Premiere in 2011, I thought it would be the last TiVo I bought. Netflix streaming was really taking off and I was convinced it’d only be a few years before I canceled my cable service.

    When I bought my Roamio in 2015, I thought it would be the last TiVo I bought…

    … I’m not sure I see the end of cable (or at least live-broadcast TV) for my family. I guess we’ll see. In the meantime, I sure hope TiVo keeps making compelling hardware and keeps selling it retail.

  15. Dear TiVo Customer:

    By now, you may have read that TiVo Inc. is combining with Rovi Corporation. The new company will maintain the TiVo brand and be a leading provider of consumer electronics, discovery solutions, recommendations, and more. Additional details can be found here.

    Our relationship with you, our customer, is our top priority and we will continue to provide you with the same best-in-class products and services that you have come to expect.

    As a TiVo customer, you have played a critical role in our success to date and we look forward to serving you going forward.

    Best Regards,
    Ira Bahr
    Chief Marketing Officer
    TiVo Inc.

  16. Followed by 30 pages of legalese, indicating that we can’t take any of it at face value. ;) By the by, that’s the same CMO that implied (by my interpretation) 150,000 units activated in the last fiscal year isn’t a sustainable business and Bolt was a last ditch effort to gain retail traction.

    Of course, TiVo’s long term retail viability with a retail *cable* product is also largely dependent on CableCARD’s potential sunset and FCC’s Unlock the Box initiative. While I generally agree with its sentiment this week, the floated framework is a mess that probably wouldn’t survive legal challenges.

    Also, there are varying degrees of retail support. Premiere kinda coasted for awhile…

    Having said all that, I agree with MarkSFCA that keeping the TiVo name (and moving HQ to California) could be a positive for retail prospects.

  17. I wonder if they will start licensing the software? I wouldn’t mind turning one of my old media center pcs into a 12tb tivo. It’s just linux as I recall.

    Young people don’t read newspapers or watch tv so Tivo’s market is shrinking, I’d love to see the survey demographics for their customers. I hate commercials, that’s why I’ve had a dvr since the replaytTV came out. That was followed by the miserable SA dvrs, media center pcs and lastly the Roamio.

  18. I don’t expect the approach to retail to change much. Go look through Rovi’s portfolio for search, discovery and other STB UX elements and imagine how they would be integrated into a TiVo. New hardware may be introduced if existing boxes aren’t capable of delivering the Rovi experience on a TiVo. We may even see a full blow Rovi DVR based on the same hardware, but using more Rovi than typical TiVo. This will let them see which features and functions are most popular and then they’ll brag about this data to potential customers (cable co’s).

  19. Yeah, on paper the synergies look promising for retail. Just hard to square that against CMO’s comments and years of generally losing more retail subscribers each quarter than they acquire. On the other hand, even meager retail sales generate significantly more revenue per subscriber than their cable deals. Related, will be interesting to see what pricing changes they introduce May 2nd. And, if they’re expanding into non-DVR hardware – could we be talking a Roku-esque solution? A Sling TV competitor? Will be interesting to watch. Guess I don’t have to shut the blog down just yet.

  20. If anyone from Rovi/TiVo is reading this, I recommend greatly simplifying the remote. Way too many buttons on the darn thing. Basically take a look at the last gen Apple TV remote and just add a couple more buttons to control turning on/off the TV and adjusting volume. The UI should then be rethought so that it works with a simplified remote.

  21. “will send us the Sezmi DVR email announcing that our DVR’s will be bricks and mighty fine doorstops.”

    Yeah, I don’t know why people keep posting this BS.

    Even though ReplayTV went through bankruptcy & was then re-sold at least once, it took declaring full liquidation bankruptcy to get out of its guide service obligation.

    Unless Rovi completely runs out of money it remains on the hook for guide service to lifetime Tivo customers.

  22. I agree that service is a lock for a long, long while (as written in the post). However, TiVo did cease Lifetime service in the UK after giving customers a couple months notice. Boxes were ten years old at that point so there weren’t enough folks left to make a stink is my guess and probably didn’t have many customers to begin with.

    Scott, based on our online analytics, some are indeed engaged. However, I like the remote just as it is. :) I would like to see the interface updated to be more app-centric though — I even proposed a few simple ideas, a couple years back, including a grid of apps (vs list) and direct app launch from mobile (beyond the unreliable ‘casting’ feature of YouTube and Netflix) as Roku does.

  23. EVERY acquisition says “service will continue as normal”, but that almost never actually happens.

    I agree with your analysis. Rovio will swiftly kill TiVo’s money-losing hardware business and continue to provide guide data to existing customers as long as that remains worth the trouble, as it’s essentially free money. Certainly one year, and I’d bet on three. After that, everybody’s TiVos will simply stop working.

    I’ve been saying for years that TiVo should pivot their business into providing their product as a service, releasing a free android app monetized via subscription fee to record video off connected tuners (OTA, HDhomerun, etc) to a connected USB3 hard drive. If they had done this in 2012 they would have a profitable business today.

    Instead they chose to cling to a model that clearly– even earlier than 2012– didn’t have a future. And now, they die.

    I used to use the TiVo logo as my user icon on forums across the ‘net and even my windows login. I loved TiVo that much. Makes me sad to see them go out like this.

  24. I can’t believe folks are falling for this Rovi cover story.

    After this elaborate head-fake, on Monday TiVo will finally unveil the TiVo Mega.

    Sure, it’s a lot of work to create a cover story quite this intricate. They even got Wall Street to play along with the gag. But it’ll all be worth it for the surprise unveiling on Monday. 24TB! RAID5!

  25. Chucky, not sure how a RAID 5 solution would work, unless you are talking a separate storage tower or a huge box… Seems like heat dissipation would be a major factor with 3 or 4 drives, and they already had to design the Bolt to look like a camel while using the 2.5″ drive, so adding at least 2 more drives will create either a radiator or a wind tunnel by your TV.

    Did you have an idea idea on how this could be accomplished, or was it just a huge wish list item?

  26. “Chucky, not sure how a RAID 5 solution would work, unless you are talking a separate storage tower or a huge box”

    The TiVo Mega is basically a rack-mountable server case with a TiVo emblem on front, but at least it’s an attractive case with an anodized precision-machined bezel. It houses 10 hot-swappable hard drives (RAID 5) totaling 24TB of storage space.

    “Did you have an idea on how this could be accomplished, or was it just a huge wish list item?”

    It was genuinely a real, existing vaporware product announcement from TiVo. Google is your friend. (You’re not a newbie, Bricketh. How the hell could you be unaware of this?)

  27. I usually lock onto the current model, and weave in and out of the “what’s coming” stuff. I must have missed this entirely, or purged it from my mind palace.

  28. Don’t forget that one thing you can only get out of a hardware device (fot OTA and cable) is viewer data. Accurate ,down to the second , which comercial you skipped, accurate viewing data.

    This is a great complement to the analytics, prediction and guide bussines that ROVI has right now.

    With Nielsen loosing relevance by the minute, this is a business that, correctly leveraged, can be worth loosing money on the boxes.

    If you add to this that people are PAYING YOU MONEY monthly (very few people go for the lifetime option) to tell you what they are watching…. this makes all the sense in the world.

    The hardware at this point does not need a lot of R&D moving forward, what they need is to develop the software and optimize the current hardware. It is plenty capable as it is.

    So a VERY LOW capital investment can keep the channel of getting boxes in houses and growing the population size for their data gathering. If anything, they should LOWER the prices of the current hardware, stop developing new HW and just focus on new SW that gets more data points (by offering you predictions and having you say Yes or No to them, this is how AI learns ).

    Just my two cents….

  29. Evolution Digital already offers TiVo on their hardware…I assume the goal is to ultimately merge the offerings into a single solution.

  30. I know and agree, but I’m saying this new device mentioned in the press release today is building upon that and from my perspective and opinion, looks like the device that TiVo will be announcing as their next thing on May 17th (according to some TCF speculation/rumors). If I’m not mistaken, TiVo DID say that this new device will be a first (IP Video merging?) and different than their prior offerings.

  31. Sure, just let me know when TiVo drops their Samsung suit and generates positive cash flow from something other than patent settlements and licensing. Each of my past employers that was acquired talked a good game at this phase. 18 months after acquisition, none of the companies looked the same (for the worse). I do like Naveen though – if he’d been able to replace Rogers several years ago, things might be different. Will be interesting to see what his role is post-merger (although, no matter what, he ended up with a kickass interim CEO compensation package).

  32. You’ve all provided some really great perspectives. I’ve been a TiVo user and lifetime subscriber for almost 17 years- since the first or second model in 2000. I had a Sony TiVo, which is relevant to my impressions of this situation.

    The most positive spin is that of a TiVo free of hardware manufacturing costs with partners to deploy a cloud based TiVo service would be the strongest TiVo. All the features of a TiVo in a small package with a couple models that you can plug in external hard drives for DVR services. To me the TiVo UI has faltered when you consider how much more advanced the “headless” UI on my iPad is compared to the box sitting under my TV. The power of TiVo is combination of on-demand cloud services into a single guide, That is definitively where things are going both with the CableCard deal and with service providers.

    Most modern platforms they don’t hold the data locally. I see that as a feature of a broader platform. Let the hardware features open up like Microsoft sells operating systems for PC manufacturers. Let me buy the DVR with the features I want and a TiVo UI. Conceptually that makes perfect sense.

    Now let’s see if Rovi is better at this then I think they are …

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