My Thoughts on the TiVo Conference Call Today
TiVo Third Quarter Subscription Growth Doubles; Expects Continued Growth Momentum This Holiday Season TiVo was out with their earnings after the close today. Analysts had expected TiVo to lose about 44 cents a share for the quarter ending October 31st and they only lost 33 cents a share. A year ago they were losing 11 cents a share.
In the earnings conference call after the announcement TiVo CEO Mike Ramsey was asked to discuss TiVo’s prioritization and timeline on a number initiatives. When asked to prioritize their upcoming initiatives Ramsey responded in the following order.
1. TiVo seems to be placing a great hope in the future of the TiVo/DVD recorder combo. Personally I think that this hope is misplaced. Although it’s a nice feature, ultimately with a 4.7 gig maximum storage space on a DVD you’re limited. I don’t think people really care about this and I think the longer-term sales numbers will be disappointing. Of course TiVo had to mention this as it is important to a number of their hardware partners.
2. A more interesting area is the whole concept of TiVo to Go. TiVo to Go will allow users to get content off of their TiVo boxes (although I’d imagine not off of the HDTV DirecTV unit) and transfer the file to a PC or a laptop for remote viewing. The exciting thing that came out of the conference call was that CEO Mike Ramsey said to expect this before the end of this year. Yikes! That’ s coming up quick. I’m looking forward to seeing this roll out.
3. My personal favorite – the standalone HDTV TiVo DVR. In Ramsey’s words, they have seen “huge” demand for the DirecTV HDTV unit currently on market. This demand is causing TiVo to reconsider coming to market with a standalone HDTV DVR. Not exactly an announcement but it’s nice to know that they are thinking about this.
4. Broadband content delivery. Ramsey said that the NetFlix deal is real and not just a general agreement or hype. He said to expect a rollout of this deal within the next 12 months and sees this as the starting point of a longer initiative of delivering content via broadband. TiVo envisions a living room that has content inputs from both broadband and broadcasts and wants to own the machine in the living room (as does Microsoft of course).
5. Although not as pressing of a priority right now, the last priority mentioned was continued development of the CableCARD.
Some other observations that came out of the call. TiVo has doubled their retail distribution in the last year primarily by introducing their products in Target and Costco, which provide huge distribution.
80% of TiVo owners have a broadband connection in the house. Although TiVo is not presently using this connection it can be activated with a simple software update by TiVo at any time. There are currently 2 million TiVo boxes out there that have broadband capability.
TiVo does receive ad revenue from their stand alone units as well as a share of ad revenue from the DirecTV units (although it does not appear meaningful at present).
As would be expected, this upcoming Holiday Season will be their top quarter and they have high hopes. They expect to add 575,000 to 700,000 subscribers in this upcoming quarter. 375,000 to 425,000 from DirecTV and another 200,000 to 275,000 from standalone TiVos.
Nobody asked any really hard questions or pressed TiVo much on the banner ads in the fast forward button. But then again it’s really only selected analysts that get approved to ask the questions on these calls and they were pitched some fairly easy balls by their analyst friends today.