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3 March 2022

Prayers of product liberation answered as Xperi masterminds TiVo split

‘Tis the season for business divorces, apparently, with Xperi joining Technicolor as another medium-sized technology vendor announcing plans to drive a wedge between licensing and products in the name of independent scale.

Faultline breathed a palpable sigh of relief upon reading the news. Long before TiVo was acquired by Xperi and merged with the licensing force, we have been crying out for the TiVo of old to rear its once-innovative head – one that has been concealed behind a business famous for patent infringement cases (or infamous, depending on which side of the courtroom you sit).

We have covered Technicolor’s split in a separate story this week, and while similarities can be drawn between the two structural shake-ups, Xperi is giving much less away in terms of financial arrangements. What the TiVo parent company has revealed is that the new IP Licensing business, once separated, will be called Adeia (Greek for ‘to license’).

Adeia has already been given its own (rather simplistic) website, despite the separation not scheduled to complete until fall this year.

Xperi has thrown very few bones to chew on since completing its takeover of TiVo in June 2020, except the odd scrap of information about targeting new growth in areas such as automotive and mobile. Despite this, we have made references in previous pieces to how Xperi looks to be driving efficiencies at TiVo that should, in theory, result in more activity in the R&D department.

The product/licensing split is evidence of that strategy in motion, as a way to offset falling product revenues, down 7% in the fourth quarter of last year to $124.7 million. The Pay TV arm – which houses TiVo’s discovery, video metadata, hardware, and other linear TV services – saw revenues decline 6% to $66.1 million in Q4 2021.

The long-term goal here is to drive adoption of higher value IPTV products and services, to offset declines in the traditional business of EPGs – where the newly acquired MobiTV business will be key. Xperi completed the integration of the dilapidated MobiTV in Q4 and rebranded the company to TiVo’s managed IPTV service.

MobiTV’s new lease of life has started off well, with new North American IPTV customers including Breezeline, the former Atlantic Broadband operator, and Cincinnati Bell – helping TiVo’s IPTV subscribers grow organically by more than five-fold in Q4 2021 compared to the previous year.

Conveniently, Xperi coincided its fourth quarter 2021 results and planned separation announcement with a TiVo product suite launch – giving us a taste of what’s to come from a TiVo hopefully liberated by distancing products from licensing. It starts with advertising, launching a suite called TiVo Xtend built on the foundation of TiVo’s first-party deterministic TV viewership data.

The product name Xtend represents the extending of data from linear to OTT as it follows the shift of advertising dollars in the same direction. TiVo Xtend wants to bridge the gap between linear and streaming – equipping advertisers with tools to understand how audiences engage with TV campaigns.

These tools include identifying who has tuned into programming or seen a message from a brand or competitor. Xtend comes with pre-built programmatic audience segments for scaling on connected TV, mobile, PC and tablet. It goes a step further with premium CTV inventory layered with custom audiences to add incremental reach and frequency to linear across 40 million households.

Xtend Dynamic Ads then places clickable ads within native TiVo Guides to promote relevant content.

Job cuts at TiVo have been a necessary evil, approaching two years on from the acquisition by Xperi, creating a new streamlined internal discovery team. We learned recently that this group is striving to stretch TiVo beyond its traditional metadata roots to richer datasets by applying AI to generate deeper levels of discovery. One result is a more holistic discovery experience for more personalized profiles.

Something TiVo has been pushing for more recently is to flip the traditional personalization model on its head – by providing personalized content recommendations from day one of a subscriber signing up for a service, not only after hours of viewing data has been amalgamated to create a comprehensive profile.

To execute this, TiVo has been pushing curated A/B tests when a video service is fired up for the first time. For example, it will show two pieces of content side by side and simply ask the viewer which title is preferred.

A series of different questions will follow, all inter-related, to eventually build a profile of the user, creating what TiVo considers a “decent” profile from just seven questions. Any longer than ten questions and consumers might start getting frustrated.

It’s a simple method of implementing personalization from day one, which might be enough to reduce high churn rates.

Another recent personalization angle for TiVo has seen it branch from traditional horizontal personalization to vertical personalization.

This means moving into not just personalizing video content across carousels, which are typically scrolled horizontally, but having different UIs for different individuals. Initial roll outs of vertical personalization experiences have been promising, and this in turn is leading TiVo into starting to personalize recommendations across different OTT services.

We noted last week that the Comcast contract effect weighed heavily on Xperi’s latest results, as fourth quarter 2021 revenue plummeted by 102% to $214.4 million. However, quarterly revenue was up 2% when excluding prior period Comcast revenue from the signing of a 15-year license agreement for TiVo patents.

This single landmark deal might well have been a significant catalyst in the decision by Xperi to separate the licensing and products divisions.