TiVo bags IP deal with Roku, how long until Comcast caves?

It was refreshing to see a TiVo press release come across the Faultline news desk this week which didn’t involve it filing another patent law suit. The newly merged entity of TiVo and Rovi has just signed a multi-year intellectual property (IP) license agreement with US streaming platform Roku – covering Roku streaming players and Roku-powered integrated TVs.

Roku will have access to TiVo’s patent portfolios, plus the OTT video delivery patents held by TiVo’s partnership with Intellectual Ventures (IV), and the deal with Roku also includes an option to use TiVo’s entertainment metadata and other products to power its search and navigation services.

TiVo now boasts licensing deals with nine of the top ten US MVPDs, including recently penned agreements with HBO and Netflix, but will it ever bag a license agreement with Comcast to make it a full house? We will have to wait until the initial determination from the ITC in TiVo’s ongoing case with Comcast, which is expected at the end of this month – a litigation TiVo will be glad to see the end of, after admitting it is harming service revenues.

TiVo has been busy bulking up the intelligent algorithms that comprise its Veveo-inherited knowledge graph, with a keen focus on voice search functionality – for which it recently signed a major deal with Sky in the UK to integrate voice search into its Sky Q set top.

Voice search functionality is a feature favored by Roku, which users can access via the Roku remote or mobile app – so we wouldn’t be surprised to see an expanded deal to also use TiVo’s natural language search technologies to power Roku’s voice search. Although, this may already be the case, as Roku’s website clearly states, “Roku is not able to disclose the vendor that is providing voice recognition technology at this time.”

TiVo’s Senior Director of International Marketing, Charles Dawes, told Faultline Online Reporter at the TV Connect show in London last month that there is no concern surrounding the expiry of some of TiVo’s key patents next year, those for rewind and other trick play functions, despite the fact that patent portfolios account for half of the company’s revenues.

In Rovi’s final quarter as a separate company, it showed that its patents revenues were falling slightly, but still represented over 50% of its revenues. The new TiVo company reported IP licensing revenues of $140.3 million for the fourth quarter of last year, up from $89.5 million in Q4 2015 – meaning these patent portfolios represented more than 55% of total revenues for the quarter.

IP licensing revenues for the full year 2016 were $347.4 million, while the Software and Services sector pulled in $83.8 million and Platform Solutions recorded $12.5 million. TiVo also upped its R&D expenditures to $125.2 million last year, from $99.9 million in 2015.

Following the deal with Sky, we suggested that TiVo will be pushing hard to suggest that its own DigitalSmiths inherited recommendation technology would work better than Sky’s existing ThinkAnalytics system, but noted that this is an unlikely outcome as switching out a recommendation system with UI and middleware is a lengthy and complex process. Dawes couldn’t comment on this, but noted that replacing a recommendation system is an easier process for TiVo than we might assume.

It reportedly took Gracenote engineers 18 months to switch out a TiVo system for its own metadata product on Comcast’s X1 platform, which was revealed at this year’s CES, which seems like a rather long time to us.

At the company’s earnings call back in February, TiVo CEO and President Tom Carson noted, “we continue to work on getting Comcast under license even if it requires seeing the pending litigation through the conclusion. While we would prefer a commercial agreement and remain open to discussions on that front, we are prepared to continue enforcing our rights through litigation.”

Samir Armaly, TiVo’s EVP of intellectual property and licensing, commented on the Roku announcement, “this license agreement with Roku underscores the importance of TiVo’s comprehensive patent portfolios for the fast-growing streaming entertainment industry. We look forward to supporting Roku with innovative entertainment enhancements that will be enjoyed for years to come by its current and future customers.”

TiVo also said this week that it has rolled out enhanced metadata packages for broadcasters, networks and studios – incorporating themes, keywords, related programs and images. Meanwhile, Roku updated its content discovery functions to its OS in the US to include a More Ways to Watch feature, which it says uses automatic content recognition based on users’ viewing habits.