TiVo (TIVO) had its earnings call last week, so there wasn’t much news for CEO Tom Rogers to talk about during a fireside chat at Bear Stearns’ annual media conference. The bottom line: TiVo is in transition from a company that sells subsidized DVR boxes to a company that sells viewer metrics, DVR software as a service over cable boxes, and expensive, unsubsidized hi-def DVR boxes.
3:08 After a few minutes of a Simpsons episode, the Q&A starts.
3:09 Talking about EchoStar war. Based on what we know, it appears that having implemented something wtihout a discernable difference was done with a workaround that would have had to be extremely novel. We feel really confident that full impact of injunction will be understood and “quite far ranging.”
3:12 Appeal process should be finalised in next few months. Don’t think they’ll get an en banc hearing.
3:13 We don’t know the timeline.
3:15 Why hasn’t EchoStar tried to settle? Don’t know. This is something that will have clear consequences for their ability to offer a critical part of its video package. We don’t think it’s something that they can begin to think it makes sense to try to delay. Will have to own up to it eventually.
3:17 Game over issue for TV. Whether cable or broadcast, commercial avoidance is here and it’s here to stay. When you get to 50 million homes, something like $14-$15 billion of missed ads. How do we solve for that? Working with ad agencies, clients, TV networks, looking for ways to make ads engaging to people who would otherwise fast forward.
3:19 Talking up second-by-second audience measurement system. Working with market research firm IRI, tied peoples’ viewing to their purchasing.
3:23 Hardware platform: Critical? Biggest issue is that our boxes were too expensive. Cut way back on subsidies, EBITDA coming out of ’06 was $30 million loss, $3 million loss last year. Guided to positive EBITDA this quarter. Created a financial picture of a company where the issues around hardware subsidies shouldn’t cloud peoples’ impressions. To be sure, ARPU and margins (~80%) are good once you get past the subsidy. Don’t subsidise HD TiVo now. Overall, a very different profile.
3:28 Software solution via Motorola box is going well. Didn’t have to do any of the hardware work, still as magical as TiVo. Comcast is happy with the results. Some minor bugs related to some speed issues, which we’ll work out.
3:31 How do you explain to people that TiVo is different from DVR? Hard to do. Word of mouth, etc. Thinking of marketing some sort of high-end bundle.
3:34 Tivo on Directv? We’ll see.
3:37 How long until new DTV Tivo boxes? Won’t be harder than getting onto Comcast box. Took a lot of work. Essence of process was 18 months. REALLY brain surgery. Whatever else we think about will be easier than that.
3:40 Q&A wraps up.