Tivo looks forward to Liberty (Take 2)

[STEVEN-H]

NEW YORK, June 4 (Reuters) - TiVo Inc. (TIVO.O: Quote, Profile , Research) said on Monday it expects its relationship with DirecTV Group Inc. (DTV.N: Quote, Profile , Research) to improve after the satellite television provider is taken over by John Malone's Liberty Media Corp. (LCAPA.O: Quote, Profile , Research).

DirecTV said in August 2005 that it would stop marketing TiVo digital video recorders to its customers, focusing instead on boxes made by NDS, a company that is owned by DirecTV's largest shareholder News Corp. (NWSa.N: Quote, Profile , Research)

But with control of DirecTV expected to pass from News Corp. to Liberty Media later this year, that could be "positive" for TiVo, said its Chief Executive Tom Rogers.

"Liberty is a company that has no ownership interests, now or after the DirecTV closes, in a competing DVR, and that probably changes things," Rogers told a Deutsche Bank investor conference.

Rogers said people he knew at Liberty were fans of TiVo DVRs
Control of DirecTV will be passed to Liberty as part of an $11 billion exchange of cash and assets with Rupert Murdoch's News Corp. Over 3 million DirecTV customers are also TiVo users.

Investors view TiVo's fortunes as closely linked to its relationships with cable and satellite operators.

Rogers confirmed the first generic cable DVRs with TiVo software will be rolled out in early tests with customers of No. 1 U.S. cable operator Comcast Corp. (CMCSA.O: Quote, Profile , Research) this August in two markets in the New England area. Comcast DVRs are made by Motorola Inc. (MOT.N: Quote, Profile , Research)

Nearly two years ago the two companies first announced they would be working together on the service. The market had speculated integration problems for the TiVo software into the Comcast DVRs may have led to delays.

"I certainly hope it remains on schedule," said Rogers. "It's largely beyond our control... I can just measure ongoing enthusiasm from Comcast operating people," he said.

Rogers said privately held Cox Communications Inc., the No. 4 U.S. cable operator, will likely roll out its TiVo-enabled Motorola boxes by the end of the year. Analysts expect it may take longer to launch TiVo-enabled boxes in the Cox regions that use Cisco System Inc.'s (CSCO.O: Quote, Profile , Research) Scientific Atlanta DVRs.

Analysts have grown increasingly cool on TiVo's growth potential, noting that its efforts to add features and share its software with cable providers, rather than making its own boxes, have yet to pay off in terms of subscriber gains.

Shares in TiVo closed Monday up 1.6 percent at $6.26 on Nasdaq.

[Earl Bonovich]

Bump...

Let's try to keep this one on topic about the
TiVo's CEO comment, and what it means to DirecTV.

The original thread:
http://www.dbstalk.com/showthread.php?t=89169

[Tom_S]

Well TiVo obviously want to get back in bed with DirecTV big time. I just have this feeling that that particular ship has sailed. Maybe if this had happened prior to the HR20 being released, but after all that work to dump a working HD-DVR for another one in development? Sounds like bad business to me.

[islesfan]

...after all that work to dump a working HD-DVR for another one in development? Sounds like bad business to me.

:lol: :lol: :lol: :lol: :lol: :lol:
You have summed up the DirecTV business model, when it comes to DVR's that is.

[Titan25]

I'll go back to what I said early in the last thread, before it became an urination contest:

At this point, DirecTV's strategy is all about standardization. They want all the UIs to look the same, and, eventually, all installations to include the same dish and switch configuration. Sure, they will be living with UltimateTV, TiVo, RCA, Sony and various other styles of receivers for a long time, but they will become an ever smaller part of the picture over time.

In this environment, the idea that DirecTV would go back to a third party provided interface is unlikely in the extreme.

Unfortunately, the best TiVo can hope for is that a warmer relationship with DirecTV might lead to license agreements for some of TiVo's patented features like FFWD compensation and Suggestions.

And keep in mind that the Cox and Comcast situations are different. These companies do not have their own in-house DVR, they buy the DVRs as finished goods from a vendor. The only difference between a Comcast Motorola DVR and Verizon Motorola DVR is the branding on the screens. For these providers, offering TiVo software is an additional revenue stream and way to differntiate themselves from the competition. This is why Verizon has also developed their own software for their DVRs. Not to be better, just to be different.

For DirecTV, there is no upside to reintroducing TiVo software. They won't signup more customers than they will without it, and any effect on churn will be invisible. I think most people will do exactly what I did -- look around at the options, and even if you love TiVo, generally the best option is to stick with DirecTV and accept the HR20. In the final analysis, the best DVR is only as useful as the content you can record on it. This is where DirecTV will differentiate themselves, and where they have always won the day.

[bonscott87]

For DirecTV, there is no upside to reintroducing TiVo software. They won't signup more customers than they will without it, and any effect on churn will be invisible. I think most people will do exactly what I did -- look around at the options, and even if you love TiVo, generally the best option is to stick with DirecTV and accept the HR20. In the final analysis, the best DVR is only as useful as the content you can record on it. This is where DirecTV will differentiate themselves, and where they have always won the day.

I think is the point in all this.

I'm not against DirecTV and Tivo offering a new DVR. Far from it. Whatever works for them, more power to 'em.

But at the end of the day when it comes to profit and sub numbers DirecTV doesn't need Tivo at all. But Tivo needs DirecTV badly. Thus the Tivo CEO says anything he can to make his company look good and try to slow the bleeding. The smartest thing for Tivo is to license it's patents to DirecTV.

[bidger]

For DirecTV, there is no upside to reintroducing TiVo software.

Which is the reason why, until I hear that Malone or another highly-placed D*official make comments like Rogers did, this is a non-story.

Deployment of new HD and SD channels and offering something along the lines of triple play offered by cable and FIOs? I could understand those things being given priority. Re-establishing a relationship that didn't have a huge impact to begin with and which a good share of that audience has already moved on doesn't make sense as priority for D* to me.

TiVo moving to cable? You see the prices you pay for service on a standalone TiVo? I bet that will be the price you pay for it when it's on cable. And cable doesn't seem to be in any hurry to deploy.

[Steve]

The Reuters report is much ado about nothing, IMO. Right now any speculation by Tivo about a new arrangement is just wishful thinking on their part, intended to be positive PR for Tivo shareholders. I wouldn't be surprised if Mr. Rogers wasn't just responding to an audience question re: D*, and he had no choice but to answer in a positive way, for fear of depressing the stock price.

I'm a Tivo fan as much as the next guy, but until there's a positive statement from Mr. Malone or Liberty Media regarding the possibility of a future relationship with Tivo, I can't get very excited by Mr. Rogers' comments. Just my .02. /s

[Herdfan]

In this environment, the idea that DirecTV would go back to a third party provided interface is unlikely in the extreme.
I think you are making an assuption here. D* has show TiVo the door, rumored in part due to TiVo refusing to do some things D* wanted via the interface.

Maybe that was the wakeup call TiVo needed. TiVo seems to be an arrogant company and probably thought D* couldn't do it on their own, and for the most part, D* has proven them wrong.

So perhaps a humbled TiVo comes back and provides just the underlying code engine with D*'s preferred interface.

All this discussion about how much D* has invested in developing their own box is irrelevant. I know that sounds absurd, but once it has been reported in the financials, it no longer matters. We are not talking about a project that is going to produce revenue if it ever launches, but instead we are talking about ongoing costs.

As of today, and especially to a financial guy like Malone, what was spent yesterday no longer matters. If D* spent $1B (made up huge number to make a point) developing their in-house DVR and ongoing upgrades and maintenance of it are estimated to cost $2 per sub per month, or they can go back to TiVo for $1 a month, then the $1B they already spent means nothing.

If future cash flows/profits can be increased by moving a different direction, then a company that has to make numbers for Wall Street will do just that.

[Titan25]

...As of today, and especially to a financial guy like Malone, what was spent yesterday no longer matters. If D* spent $1B (made up huge number to make a point) developing their in-house DVR and ongoing upgrades and maintenance of it are estimated to cost $2 per sub per month, or they can go back to TiVo for $1 a month, then the $1B they already spent means nothing.

If future cash flows/profits can be increased by moving a different direction, then a company that has to make numbers for Wall Street will do just that.

I agree in principle with what you say...it is all about annualized expenditures. However, the cost of bringing in TiVo as an underlying engine is pretty significant, both in terms of first year expenditure and ongoing maintenance. To effectively "rip out the guts" of the HR20 software and layer the UI on top of the TiVo engine is something that sounds a lot simpler than it is.

From the TiVo perspective: The Tivo UI is intimately bound to the function of the engine. In many cases, it is hard to determine where the "UI" ends and the "engine" begins.

From the DirecTV perspective: Much of the HR20 UI is also based upon the functionality of the underlying code. I don't know how modularized and/or clearly delineated the boundary is between engine and UI, but one thing is for sure, the HR20 would work radically differently with a TiVo engine instead of the current engine.

So, the initial build costs are high, with lots of risk. The maintenance issue is no more attractive. The only way it works is for TiVo to take over COMPLETE responsibility for the code, front end and engine. Otherwise, coordination of TiVo and DirecTV development efforts will hamper release schedules, impair QA efforts, and end up costing more.

DirecTV would effectively be out-sourcing development of the HR20. For this to financially attractive, it has to cost DirecTV less than keeping a maintenance staff of programmers around. I don't see how TiVo can do that for less than it costs DirecTV and still make a profit. It's not like TiVo has access to a pool of inexpensive programmers that are not available to DirecTV as well. Their ability to leverage efforts on other versions of the software to defray the costs of the DirecTV version would be minimal, since the DirecTV version would have to be HIGHLY customized.

So, I just don't see the savings for DirecTV being significant, if there are any at all. Further, it is not like TiVo is a rock solid supplier of DVR technology to lots of OEMs. They are still trying to get that business model to work. They could go out of business next year (or worse, get acquired by a competitor) and then DirecTV would right back in the business of building their own DVR.

Ultimately, DVR technology is strategic to DirecTV...they have plans to make the HR20 or it successor the centerpiece of their competitive strategy. It is just something that is too important to the company to ever be in the position of not controlling their own destiny.

I,as much as anyone, wish that it was otherwise, but this is reality.

[wilbur_the_goose]

From my understanding, the D*/TiVo divorce was over FOX's instance to selectively disable the fast forwarding function. FOX/NewsCorp never implemented it, but it's probably there in the HR20.

0000000000000
Anyway, I see the TiVo statement as trying to pump the stock value. Nothing wrong with that, but you do need two to tango.

[Earl Bonovich]

From my understanding, the D*/TiVo divorce was over FOX's instance to selectively disable the fast forwarding function. FOX/NewsCorp never implemented it, but it's probably there in the HR20.


I thought I have heard them all... but that is a new one to me.

[Alan Gordon]

I thought I have heard them all... but that is a new one to me.

I remember when people were saying it... I'm surprised you don't...

~Alan

[bidger]

Any S1 D-TiVo owner should recall the hacking that enabled false Lifetime Service and all locals. Imagine how it felt for a company that was trying to do all it could to secure against signal theft to be blindsided by that. Name me a multichannel provider who wouldn't have had issues with that. You partner with a DVR company and as a result there's widespread hacking. And it didn't end with the S2, so I can see why D* would say, "Enough of this sh*t! We'll do it ourselves".

And you notice, you don't see the hacking sites for the in-house DVRs that you do for the D-TiVos. That's another reason why I can't see D* going back. I see people holding out hope that Malone is a TiVo fan, but his first role is as a businessman and I can't see why he'd move back to a DVR platform where there's widespread hacking.

[Steve]

Re: selective disabling of FF, a little Googling found this link: http://www.pvrblog.com/pvr/2005/02/american_idol_b.html. One of the comments from that page reads:

"Like the previous case (an inability to fast-forward 24 in HD), whether or not Fox ordered Comcast to force commercials on American Idol viewers is not itself that interesting. What's interesting is that Comcast's software allows for it at all. I'm not aware of any corresponding "feature" in Tivo's repertoire."

/s

[Alan Gordon]

I keep thinking of all those Mercury ads airing on TV advertising how you can get Sirius satellite radio...

Sure, most people think any DVR is a TiVo, but name recognition means a lot in this world, and a DirecTV ad with TiVo is probably going to get people's attention more. A lot more, probably not, but it is a point...

TiVo helps DirecTV differentiate their company from the others...

~Alan

[RobertE]

IMHO, Tivo stands about as much change as getting back together with D* as a Red Shirted crewman making it back alive unhurt to the Enterprise on Star Trek. :hurah:

[carl6]

DirecTV has defined the user interface, menu structure, and feature set that they want in their DVRs. What would any consumer gain if Tivo were to develop the DVR that looked and felt and operated exactly like the HR20? Rest assured, there would be no backdoor codes, no MRV, no hacks, probably even no DLB. It would be built to DirecTV spec's, just as the HR20 is.

I agree with everyone that says DirecTV and Tivo have parted ways for good.

As to the possibility of DirecTV buying Tivo - if they did I see that as the death of Tivo, not the rebirth. I do not see that as opening the door for a Tivo like DVR coming back to DirecTV.

Carl

[BobV]

I can not see DirecTV working with Tivo again.
Tivo has a hole in its ship!
D* is doing things in house now. (No silent partner).

Besides some of those Tivo forum experts have issues and that help me to push
away from Tivo. :p :p :p

[celticpride]

Well i think D* needs to go back to tivo because at least the HD-tivo doesn't delete your programs before you can watch them or give you partial recordings like the HR20 i am so dissapointed in the hr 20 so far i hope they solve these problems before the next NBA season, because nothing would make more angry then to miss a recording of a basketball game after i had paid money for a sports package like NBA league pass or NFL sunday ticket!!

[wilbur_the_goose]

celtic, I am a TiVophile that just moved to the HR20. Actually, it's been a couple of months. But I've never had a problem like you're describing.

Back on topic - Steve - thanks for finding that link. I think I got my info from Yahoo quite a while ago. But, of course, the primary issue was the almightly dollar - don't worry Earl, I'm not kidding myself :)

[Albie]

Which is the reason why, until I hear that Malone or another highly-placed D*official make comments like Rogers did, this is a non-story.

And you won't hear anything from Malone or any of the Liberty people until the deal actually closes, lest they incur the wrath of the SEC, which is never a good thing in mergers or takeovers.

Personally I don't believe they will be interested in bringing TIVO back in for most of the reasons already pointed out.

[MikeR]

Personally I don't believe they will be interested in bringing TIVO back in for most of the reasons already pointed out.

In addition to those reasons, TiVo has a goofy logo. :grin:

[Steve]

Back on topic - Steve - thanks for finding that link.Happy to do it. Your statement sounded so "out there", I figured there had to be some truth behind it! :lol: /s