) recently announced that it has started delivering advanced
television entertainment solutions to subscribers of Mediacom
Communications. The deployment of TiVo Premiere, Mini IP set-top
box client and mobile applications will enable Mediacom
subscribers to access both IP and traditional video on demand and
linear content at one go.
TiVo also announced the availability of its mobile application
and second screen companion solution for cable operators.
Atlantic Broadband will be the first major US cable operator to
offer these bundled solutions (TiVo Mobile application and
Set-Top Box solution) to its subscribers by this fall.
Lately, TiVo has been focusing on partnerships and strategic
alliances to drive subscriber growth. Early this month, TiVo
entered into a partnership with Vubiquity, a leading global
provider of multiplatform video services. The partnership will
integrate Vubiquity's AnyVU streaming service with TiVo's user
TiVo has a number of partnerships with major companies including
Comcast, Charter Communications, RCN, and Suddenlink. TiVo also
expanded its services globally through partnerships with ONO,
Virgin Media and Canal Digital (in Scandinavia).
These partnerships have been the key growth catalyst for TiVo's
subscriber base in recent times. In the recently concluded first
quarter, total subscriber base jumped 36% from the year-ago
quarter to 3.40 million. Net addition to total subscription was
255K while the churn rate per month was a negative 1.5% compared
with a negative 1.6% in the year-ago quarter.
Beside partnerships, settlement of long pending lawsuits has also
driven growth for TiVo over the past 12 months. Most recently,
TiVo settled with
) erstwhile Motorola unit,
) and Time Warner Cable for approximately $490.0 million. TiVo
also announced patent licensing deals with Google, Cisco and
Arris Group (which bought the Motorola Unit from Google in
The end of these lawsuits follows the settlement of its disputes
). Through these settlements, TiVo has not only ensured a
recurring revenue stream till 2018 ($1.6 billion), but has also
succeeded in lowering apprehensions about its patent rights. This
will supposedly enable TiVo to freely use the technology going
Although the legal settlements did away with a major overhang on
the stock, we believe that TiVo needs to focus on increasing its
subscriber base by expanding its product portfolio going forward.
We believe that growth in subscriber base will be the most
watched metric by investors to determine TiVo's future growth
In this regard, we believe that rising product development costs
and sales & marketing costs will continue to negatively
impact TiVo's profitability in the near term. Increasing
competition from cable and satellite providers could also hurt
profitability going forward.
In such a scenario, we believe that TiVo will continue to pursue
opportunities for developing strategic partnerships with cable
operators both in the domestic as well as international markets
in order to boost its subscriber base going forward. We believe
that these partnerships will also help in countering competition
over the long term.
Currently, TiVo has a Zacks Rank #3 (Hold).
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