The financial shape of TiVo took an interesting turn this week as it came out with better than expected financials for Q1 and broke out its IP licensing, now making up around 45% of its revenues, into two clumps; US and the rest of the world. Executives talked up the opportunities for massive growth in the rest of the world and cited 9 out of 10 leading US pay TV operators paying a technology license. Comcast is the notable odd one out, and there is every chance that it might cave in later this year, before it goes to trial over the issue come 2018.
When TiVo was acquired by Rovi, we said at the time that the two each had strong licensing revenues and asked if the leopard would in any way change its spots. So far it has been far less litigious than in the past, announcing deals without litigation for the most part, with Comcast being the odd one out.
Clearly the old Rovi was far more successful at negotiating license revenues outside the US, and the translation of this capability onto the old TiVo patents shows lots of promise. Until now no-one has licensed the core DVR patents outside the US. The company also made the point that internet delivered pay TV technology licensing was the same as pre-internet licensing, with the exception of then only VoD is involved, when the model is different and it does not involve DVR or Cloud DVR.
Q1 licensing revenues for the US was $63 million, compared to $30 million a year ago prior to the TiVo deal, and much of this was driven by inheriting the Dish settlement terms and licensing fees from TiVo for DVR. In total, inherited old TiVo deals contributed about $24 million of that $33 million increase. Most of the rest of the growth came from new deals signed with Roku, Discovery and Dwango.
The platform revenues for the quarter reached $88 million, up from $35 million last time pre-TiVo and metadata is included in this revenue and TiVo has now broken this out into separate products. TiVo introduced Studio, Broadcast and Network Metadata Packages incorporating themes, keywords, images and also launched TiVo SongConnect, a music metadata package.
Almost the first thing that was mentioned after the headline was the Vodafone Spain deal for a new user experience and cloud DVR, taking a large chunk of the OTT video delivery in Spain away from incumbent Kaltura, although the core CMS still sits with it.
Vodafone Spain launched a new version of Vodafone TV and TiVo said it was the first operator to launch integrated video services and 4K content in Spain.
Sky, one of the two largest entertainment companies in Europe, opted to use TiVo voice search across linear TV and VoD using its knowledge graph engine, on its next-generation box, Sky Q.
Other deals included Japan’s Sharp using TiVo’s G-Guide in its new Aquos Blu-ray disk recorders, and Canadian pay TV operator Koji launched a 4K TiVo multiroom DVR system with integrated Netflix. And Turner (part of Time Warner) selected TiVo as its EMEA metadata distributor to power its EPG across 44 channels.
Executives talked about having metadata covering 70 countries globally across 500 customers, including TiVo guide customers and in search it has deployed with 6 of the top 8 US pay TV operators, reaching 30 million households. In analytics, it said it provides an advanced data-driven TV advertising optimization platform and we would expect to see much more of in its product revenues, as we go forward.
Guidance remained unchanged at $800 million to $835 million for the year, and although the stock never shifted at all on this news, the merged company looks to us to be significantly stronger than the two parts, and we would expect that to appear within the price as its continues to manage the merger process over the next two quarters.