TiVo Expands Advertising & Analytics Initiatives

Dave Zatz —  July 21, 2012 — 9 Comments

dark-knight-tivo-3

While TiVo rarely generates positive cash flow via DVR subscribers, they’re sitting on a healthy war chest via patent litigation victories. So why not drop $20 million cash on New York-based TRA to expand their media research services (and patent portfolio)? From the announcement:

TiVo Inc. (NASDAQ: TIVO), a leader in the advanced television entertainment market, today announced that it has agreed to acquire TRA, Inc., maker of the first and leading platform with the world’s largest database that directly links information from the same households as to what viewers watch with what they buy. TRA matches television exposures from 1.5 million TV homes with specific purchase transactions. The acquisition is expected to create a powerful combination of insights that will offer the TV advertising industry Internet-level measurement and accountability accelerating TiVo’s position in the billion dollar television analytics business.

According to the New York Times, TRA has had “27 cable and broadcast networks and 45 different advertising brands” on their roster during its five year existence (yet it’s not clear how many are still in play). T.R.A. originally resolved into “The Right Audience” … but will conveniently morph into “TiVo Research and Analytics” when the deal closes later this month. Interestingly, the Times pegs TiVo as a “television analytics company” — which is a bit like calling Apple an iPod company. Yet ,TiVo had been an investor in TRA and presumably the company will find synergies among the new and existing audience measurement tools (like Stop|Watch) along with their respective client rosters.

Meanwhile, across the pond, Virgin Media has leveraged their TiVo platform to advertise The Dark Knight Rises via an interactive widget. From CNET:

On your TiVo, you can watch interviews with the cast of the new film, while clips and photos from the films take you into the seething heart of Gotham City. Special trailers show the dark knight detective in action, meting out pointy-eared justice to the cowardly, superstitious lot that is the criminal element of Gotham.

And, if that’s not enough Batman for UK TiVo subscribers, Virgin Media’s app also offers up on demand access to Batman Begins and The Dark Knight (presumably for a fee) to whet customer appetites for the trilogy’s concluding film.

9 responses to TiVo Expands Advertising & Analytics Initiatives

  1. Oh, great…… NOT!! Take the one major advantage of 3rd party DVR’s and do everything in your power to nullify that advantage.

    What is that advantage you say? NO F’in Commercials!! Now lets add in more junk commercials/ads.

  2. TRA appears to be a good strategic acquisition for TiVo. Even with this purchase along with the $100M allocated for the current stock buyback TiVo still has a very healthy cash balance. It will be interesting to see if the non-DVR side of the business ever significantly contributes to the bottom-line — it hasn’t to date.

  3. On the surface TV analytics seems like a natural fit for TiVo, yet I can’t help but question whether or not this was actually a good purchase on the part of TiVo. Since Tom Rogers took over the helm of the company, he’s made Stop/Watch a central focus of the company and yet investors still know absolutely nothing about the profitability or growth (or lack of it) of the service at the company. At least with the DVR service, you can track subscriber growth, but Stop/Watch results are so insignificant to TiVo, that they don’t even report their metrics. If they’ve had years to develop the service and have made it one of their primary pitches to partners, then one would expect to see more in the way of results from their efforts. To further sink money into something that hasn’t proven itself viable seems like an unwise move. If this is a multi-billion dollar opportunity, then TiVo should step up to the plate and prove it. Ultimately, this seems more like it’s about Rogers throwing money at a pet project then actually improving TiVo’s technology or enhancing what they do. I’m all for opening up alternative lines up business, but at what point does analytics become a distraction from more profitable avenues that they could explore?

  4. Davis, your comments make a lot of sense and I can understand your perspective. I look at it a bit differently. I think TiVo Advertising Sales and Media Research are very complementary, and possibly even critical parts of TiVo’s ecosystem for the MSOs. With TiVo’s dwindling subscriber base, until recently, its been a difficult sell to advertisers. This may begin to change as TiVo’s base continues to grow. The challenge has been the lack of growth in the US and the inability to gain traction with a large MSO. I think it would be relevant for the 18 analysts that follow TiVo to begin to probe a little more as to the ROIC TiVo expects to receive from these two additional segments of their business which currently seem to account for much less than 5% of total revenues.

    It appears that TiVo’s frenemies also have the media research angle covered and advertising as well in their platforms. For example, DIRECTV’s research and advertising capabilities are described here –> http://www.directvadsales.com/Research.aspx#0-1

  5. I think it’s a reasonable strategic move. But TiVo’s user base is primarily growing in the UK.

  6. “While TiVo rarely generates positive cash flow via DVR subscribers…”

    How is that possible? They get a steady stream of subscriber money in exchange for guide data that is essentially free for them to provide. How can that stream not be net positive?

  7. I imagine TiVo, Inc investors ask that very same question nearly every quarter… In a vacuum, sure the subscribers could be profitable. But as part of the total picture, TiVo’s expenditures routinely eclipse their income. And TiVo had been bleeding subscribers for several years until they recently found success with Virgin in the UK.

  8. “How is that possible? They get a steady stream of subscriber money in exchange for guide data that is essentially free for them to provide. How can that stream not be net positive?”

    TiVo has been spending approximately 45% ($110M) of annual revenues ($238M) on Research & Development associated with their MSO roll-outs and creating a unified Series 4 platform. They expect these R&D costs to go down later this year which should allow them to be EBITDA profitable excluding litigation expenses. I’m forecasting them to be EPS profitable in FY14 (next year) but many analysts still expect them to post an EPS loss in FY14.

  9. “In a vacuum, sure the subscribers could be profitable. But as part of the total picture, TiVo’s expenditures routinely eclipse their income.”

    We’re good. I was misreading that line as talking about subscriber cash flow in a vacuum, which obviously made no sense to me.

Leave a Reply

*

Text formatting is available via select HTML.

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>