My thoughts on the TiVo Fourth Quarter Conference Call
TiVo Chairman and, for the time being, CEO Mike Ramsay and CFO David Courtney spoke this afternoon on TiVo and their upcoming prospects. According to Ramsay, last year was all about subscription growth — getting their users above 3 million — this upcoming year is all about profitability.
Ramsay stressed profitability by year-end as the single most important element for the company in the upcoming year. Expect to see less advertising, marketing and rebates.
Although I would suspect that we will most likely see some cost cutting at TiVo, Ramsay nonetheless continued to stress TiVo’s broader Tahiti initiative and outlined three key growth areas where they expect to innovate in the upcoming year.
1. Increased mobility and portability. Ramsay continued to promote the TiVoToGo technology. He also specifically reiterated today that TiVo is developing the ability to offload recorded television to Microsoft’s Portable Media Center units.
2. Deliver a TiVo branded experience on the PC. Wow. This is huge. Although there are over 3 million TiVo units out there right now (about a million with broadband connection) there are vastly, vastly more PCs out there. “This platform (PC) is playing an increasing role in the management of home entertainment and TiVo intends to offer applications and services that capitalize on the PCs unique power and network capabilities as well as it’s enormous reach and scale of install base,” said Ramsay.
I have suggested in the past that TiVo needs to offer a software solution to run on the PC. They did not elaborate on what form this “TiVo branded PC experience” might take. Could this be a possible competitor to Microsoft’s Media Center PC? Might TiVo begin to sell a stand-alone software package that could be installed on a PC with a TV tuner card?
3. Continue to develop a broadband delivery platform. TiVo is right on here. They should continue to look at ways to push both popular programming and micro content over the network and on to their units.
The CableCARD issue was brought up and Ramsay insisted that the next round of TiVo CableCARD capable devices will work with existing CableCARD technology. Although Ramsay described a “cable monopoly” as a frustrating barrier, it would appear that at least with regards to their upcoming products that they are not dependent on the bi-directional CableCARD. This would leave me to speculate that their upcoming standalone HDTV unit might only offer a single tuner solution — a less than satisfying solution.
Ramsay also stressed the future importance of digital media. “You can see it everywhere, it’s not just about digital television, but also tapping into the internet for more media choices — like blogging, and podcasting as well as video downloads,” said Ramsay. “These trends indicate the consumer appetite for more choices, personalization, control and mobility.”
Management did speak briefly about the importance of new high definition platforms and also mentioned that their DirecTV/HDTV unit was the only current DirecTV/HDTV option available and said that they did not believe that this was going to be replaced, “anytime soon.”
Humax’s upcoming television with TiVo built in was mentioned and Ramsay also spent time emphasizing DVD burning TiVo units.
Although several questions were asked requesting an update on TiVo’s CEO search, the company did not give any definitive answers regarding this significant question. TiVo confirmed meeting with candidates but said that they were keeping the status of this process confidential for the time being.
Ramsay was challenged multiple times on his previous assertion that longer term subscriber growth would reach 10 million. It was suggested by one analyst that perhaps TiVo needed to scrap this projection, hunker down, and get profitable. Although TiVo did not seem ready to concede the 10 million subscriber growth number just yet, it is clear that at least for the upcoming year subscriber growth will be taking a backseat to profitability.
Arstechnica’s coverage. And Engadget. San Francisco Chronicle’s coverage. PVRBlog. MegaZone. Om Malick.
It makes sense why they would retire all of their debt and put the company in a profitable position, but is it really the right strategy with Cable moving into TIVO territory, why not rent out their boxes at a higher subscription rate? Why not spend MORE money today in exchange for 2 year contracts. It’s worked for the phone industry, it sounds like it’s working for the cable industry and I think that there would be plenty of consumers who would rather pay Tivo $20 per month, then to use the crappy motorola and scientific atlantic boxes. I think that Ramsey still wants to control the company and will ultimately control the new CEO. He needs to quit the board and allow a CEO with real vision to take over. The good news is that if he continues to cash out his stock at the expense of shareholders, then eventually, he won’t have the power to stay on the board.
The could come out with a HD compatible receiver at a realistic price point and take the lead position in the hdtv pvr category. Higher margins, and take the lead in households with early adopters (ie $$) with a true convergance device. Its simple. HD PVR tivo with integrated 802.11g and gig E for about $500 or 700 with extreme storage. Ability to play back your tivo shows on your PC or laptop. The high end consumer would embrace that BIG time.
ok. i love TiVO. waaaay superior to their cable-dvr counterparts. i own 2 tivo boxes…both of which are still in their boxes. why? well, since my landlord wont let me install a satellite dish on her roof, there goes my DirecTV tivo box. so why arent i using my other series 2 tivo box? because cablevision’s poor attempt at a DVR system HAS the capability of a double tuner recorder. tivo’s dont, unless you have the directivo.
want more definite subscribers? tivo must develop the double tuner box.