A Nimble TiVo Keeps Pace with Changing Landscape, But for How Long?

Long before Netflix and Roku, TiVo was the poster child for TV innovation, popularizing the hard drive-based digital video recorder and trick play TV features. It was credited with no less a feat than changing the way people watch TV.

But in the OTT era, when streaming has muscled in on time-shifting and countless terabytes of video have leapt from consumer’s DVRs to the cloud, TiVo has seen its consumer presence wither. While it continues to introduce retail set-top boxes, it has been eclipsed by lower-cost streamers like Apple TV and Google Chromecast. (Aside: TiVo competes in a slightly different category because its devices also include DVRs and broadcast tuners, thus offering a hybrid option to retail STB buyers). The company activated just 37,000 TiVo-owned subscribers in the second quarter, and while the number represented a 37 percent year-over-year increase and the eighth straight quarter of double-digit growth, it mostly serves as a reminder of how small the retail business is, especially in the face of new and generally less expensive device competition. There are roughly 1 million retail TiVo boxes in use today, compared to 25 million Apple TVs sold over a much shorter timespan.

Despite the headwinds, TiVo rolled out a new box, dubbed The Bolt, to succeed the Roamio. It purchased the email list of now-defunct Aereo and has been marketing an over-the-air DVR to cord cutters left high and dry by Aereo’s shut down. Meanwhile, TiVo has inked deals with cable providers like Comcast and Cox to offer their video-on-demand titles through TiVo’s service.

TiVo’s main set-top box business revolves around traditional pay TV operators—the company activated 278,000 cable-provided subs in the second quarter and has roughly 5 million active boxes through MSO partnerships. Here, too, TiVo faces immense competition. Major competitors such as Motorola, Cisco, Arris, Pace and Technicolor have consolidated creating formidable economies of scale. The DVR technology that TiVo pioneered is now a commodity, and cloud, or network, DVRs and virtualized set-top boxes pose an acute threat to TiVo’s hardware business.

But the company hasn’t ignored the competitive headwinds. In addition to investing in multi-screen and TV everywhere technology, they’ve migrated into analytics and advertising with TiVo Research, an audience research and data analytics division that has partnerships with several major brands, including Viacom, Quantcast, Ninth Decimal and Simulmedia. In May, TiVo acquired middleware maker Cubiware to help the company expand into international markets. Last year, TiVo acquired Digitalsmiths, a cloud-based content discovery and recommendation service that’s been deployed in 64 million U.S. homes through a variety of top tier pay TV operators.

And, while TiVo continues to invest in new technologies and new revenue streams, it’s the company’s other, somewhat less visible, strategy that has yielded some of its biggest profits: lawsuits. TiVo has made a lucrative habit of suing DVR makers to the tune, thus far, of $1.6 billion. It’s a strategy the company plans to continue with a fresh suit against Samsung that encompasses not just DVR-related intellectual property, but mobile device processes as well.

TiVo may not change the way we watch TV again, but if they can keep riding the tumultuous wave of a TV market in flux, it will be no small achievement.