UK Cable Operator, Virgin Media, Taps TiVo to Develop its Next-Generation TV Platform

--TiVo Reports Lower Earnings, Subscriber Base Shrinks

Shortly after announcing a set-top data deal with Google last week (see the article published on itvt.com, November 24th), TiVo announced that it is returning to the UK market via a strategic partnership with cable operator, Virgin Media, that will see it developing the latter's next-generation TV platform. According to the company, the partnership agreement is mutually exclusive, and calls for TiVo to develop a converged television and broadband interactive interface to power Virgin Media's next-generation HD set-top boxes (including boxes with and without DVR capability). Terms of the deal were not disclosed. TiVo left the UK market back in 2003, after a DVR it offered in partnership with Thomson and BSkyB failed to generate significant sales. The market has since then been dominated by BSkyB's Sky+ DVR line.

Under the terms of the deal, TiVo says, it will become the exclusive provider of middleware and user interface software for Virgin Media's next-generation set-tops, and Virgin Media will become the exclusive distributor of TiVo services and technology in the UK. TiVo claims that the next-generation platform it will develop for Virgin Media will enable the latter's customers to search and discover content through "major advances" in VOD integration and broadband video delivery, and will create a "one-stop-shop" for in-home entertainment. "TiVo's proven track record of innovation, strength of its patented technology and experience in developing best-in-class user environments make it an ideal strategic partner for Virgin Media as we move aggressively to bring our next-generation TV service to market," Virgin Media CEO, Neil Berkett, said in a prepared statement. "The superiority of our fiber optic network, combined with TiVo's capabilities, will allow us to offer consumers the most significantly advanced and compelling TV service available in the UK, and we believe will do to the TV market what Virgin Media has done to the high-speed broadband market." Added TiVo president and CEO, Tom Rogers: "This deal underscores TiVo's commitment to expanding its global footprint through strategic alliances with leading international media companies to help them deliver the best in-home entertainment experience for consumers. We are very excited about this new distribution relationship with the UK's most advanced pay-television provider and are particularly proud to have been selected as Virgin Media's core software partner for its next-generation DVR-enabled set top boxes and its next-generation non-DVR set top boxes. Virgin Media is a true leader in the world of entertainment and their enthusiasm for building the next generation of pay-television is an excellent opportunity to put all of TiVo's innovation to work in a product distributed by a world-class partner. We believe this international deal affords us a significant subscriber growth opportunity."

According to TiVo, the first co-branded product to result from the deal will launch next year. (Note: A recent article by Jeff Baumgartner of Cable Digital News examines the implications of the new TiVo-Virgin Media deal for SeaChange International, which supplies its TV Navigator middleware--originally developed by Liberate--to the operator.)

In other TiVo news:

  • The company also announced its fiscal Q3 (ended October 31st) earnings and subscriber numbers last week. Revenues totaled $47.1 million, compared to $51.7 million for the year-ago quarter; adjusted EBITDA was $1.4 million, compared to $95.3 million for the year-ago quarter (note: the year-ago figure included $87.8 million gained via the company's litigation against DISH Network and EchoStar); net losses totaled $6.7 million, compared to net income of $100.6 million for the year-ago quarter (note: excluding earnings from the DISH Network/EchoStar litigation, the year-ago figure would have been a loss of $0.9 million); and cash, cash-equivalents and short-term investments totaled $245 million, up $40 million from the year-ago period and up $7 million from the previous quarter. In addition, TiVo-owned gross subscriber additions totaled 34,000, compared to 44,000 for the year-ago quarter, and TiVo-owned monthly churn rate was 1.7%. TiVo-owned subscriptions ended the quarter at approximately 1.5 million, and cumulative total subscriptions were approximately 2.7 million, representing a loss of 314,000 net subscribers during the quarter (note: back in January, 2007 TiVo claimed to have 4.4 million subscribers--its largest number ever). In its earnings press release, TiVo also said 1) that a new DirecTV TiVo HD DVR is "on track" to launch next year; 2) that it "expect[s] to continue to partner with Comcast for another year of development work toward porting the TiVo experience onto Comcast boxes" and that "this development will support increased functionality and ongoing work toward tru2way which we expect will facilitate TiVo's move into additional markets"; 3) that "Comcast recently reinitiated its marketing efforts across the New England market, now that the vast majority of technical hurdles have been cleared" and "has started running a new TV spot that focuses on the new unique capability to offer TiVo Online Scheduler to their subscribers, and recently launched a new series of radio promotions and billboards"; 4) that its distribution deal with Cox "is also progressing as the roll-out of TiVo has moved out of the testing phase and is in the very early stage of deployment in its New England region"; 5) that the Cox roll-out is expected "to pick up speed and increase in scope throughout 2010"; and 6) that the company is developing a new keyboard remote control, which "will build on the ease of the original TiVo remote control and will enable users to get even more out of the broadband experience that TiVo delivers." TiVo's full Q3 earnings release is available here.
  • Hybrid Television Services, the exclusive licensee of TiVo products in Australia and New Zealand, last week launched a new 320GB TiVo box, as well as CASPA on-Demand, a new broadband video portal that will provide Australian and New Zealand TiVo users with over-the-top access to a range of new-release movies, popular TV shows, free music videos, artist interviews and music concerts. Gizmodo Australia has more.



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