TiVo, Inc Trims The Fat

Dave Zatz —  September 17, 2012 — 19 Comments

I’ve heard from multiple sources that TiVo recently laid off a number of folks. However, I’ve been unable to confirm the specific count and will speculate that we’re only talking couple dozen. While these moves surely suck for the employees impacted, I’m confident this isn’t a negative reflection on TiVo’s financial health. In fact, quite the opposite. As I said on Twitter, “a small number (let go) as TiVo reigns in R&D spending. Nothing for consumers to sweat, investors probably happy.” When I first started covering TiVo way back when, I felt they were overstaffed. Although I haven’t kept tabs on this aspect of the business, TiVo obviously came to a similar conclusion based on comments from their recent quarterly call:

we continue to expect reductions in R&D spend in the back part of the year, which will be at least $5 million less than the $60 million spent in the first half of the year, even with the impact from the TRA acquisition. On a quarterly basis, we’re expecting modestly down R&D spend in Q3 followed by a more significant step lower in Q4.

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19 responses to TiVo, Inc Trims The Fat

  1. It’s probably worth pointing out that TiVo’s greatest income generators these days are mostly patent litigation leading to licensing and their hugely successful Virgin Media partnership in the UK.

  2. Wait just one second, you’re saying that TiVo spends $120m on R&D per year? TiVo?!?

    One hundred twenty MILLION dollars. Per YEAR? That’s eight HUNDRED employees at $150k/year.

    Those guys must be sitting back drinking doctor pepper and playing videogames all day long, because they aren’t producing anything of value.

    Trim the fat? It’s all fat.

  3. The only thing I really fault them for is not taking those DISH patent earnings to reduce or remove monthly fees to grow stand alone market and mind share.

  4. The only thing I really fault them for is not taking those DISH patent earnings to reduce or remove monthly fees to grow stand alone market and mind share.

    As you know, they did cut the monthly service fee from $19.99 to $14.99 but I wouldn’t object to them figuring out a creative way to lower those fees even more to improve stand-alone adoption even at the expense of near-term cash flow. The challenge is always balancing subscriber acquisition costs (SAC) with their subsidized hardware model against the monthly or lifetime fees. With SAC at in the range of $230 – $250 per subscriber it takes 15 to 17 months to turn a subscriber revenue positive. I think it would be a good investment to lower the monthly fee to $9.99 to juice stand-alone adds especially once their full ecosystem comes online. Its always a balancing act but starting to grow stand-alone subscribers again should be a key metric that TiVo needs to achieve in 2013.

  5. Their R&D spending has been crap for their output for a long time.

  6. Have to agree, the R&D hasn’t produced much of anything innovative in the last couple of years. I wish they would open the platform more so that developers could produce apps or other ways to extend the product.

  7. One hundred twenty MILLION dollars per year on R&D and still no full HDUI. C’mon, now.

  8. Wow…just wow.

    TiVo should just close up shop, or sell itself. Their engineering SUCKS, and is basically leveraging Broadcom for most of their dirty work. Heck, the best part of TiVo, the Android/iOS App exceeds every internal effort to improve the user experience. With today’s modern ARM SoC Designs, there is ZERO reason to use Broadcom and MIPS for hardware. It makes even LESS sense to rely on Adobe Flash/AIR for your API.

    If TiVo were wise, they’d be using GNUStep API and provide a path for iOS ports. Heck, why not use Enyo (the former WebOS API) for providing a developer framework? TiVo has rested on it’s laurels for nearly a decade. TiVo needs a new CEO and direction. Tom Rogers is the wrong man for the job.

  9. This is so depressing. I figured with the little output of value from TiVo that R&D consisted of 4-5 guys just trying to update a few things while also having to do tier 3 support. If TiVo is spending THIS MUCH on R&D, and has THIS LITTLE to show for it, than as others have said, game over….

    … Sadly, it is still the best DVR out there that I know of…

  10. Well, seems like a good place to mention that I finally gave up on the HDUI on my Elite and went back to the SDUI. I actually liked the HDUI but the unbearable slowness of it just got the better of me after living with it for some months. I mean the SDUI still sucks, ignoring keystrokes sometimes for many seconds, but hey, its better than the HDUI…

  11. “Well, seems like a good place to mention that I finally gave up on the HDUI on my Elite and went back to the SDUI … I mean the SDUI still sucks, ignoring keystrokes sometimes for many seconds, but hey, its better than the HDUI…”

    You ought to try the TiVo HD. The SDUI doesn’t ignore keystrokes.

    (I find it fascinating and depressing that for two tech companies whose products I happily use, TiVo DVR’s and Apple PC’s, in both cases I avoid their attractive new hardware that I’d really like to purchase because I prefer the previous generation software. I like the TiVo HD cuz it runs the SDUI without bugs, and I like my previous generation Macs cuz they run Snow Leopard – aka the best version of OS X. Elvis Costello wrote a song called 5ive Gears in Reverse that seems to sum up my feelings…)

  12. “As you know, they did cut the monthly service fee from $19.99 to $14.99″

    That was implemented about the same time the Premiere went up in price 50% (albeit with a larger hard drive). I’d like to see more of an Xbox Live model. Slightly more expensive hardware and no fees for super basic service, as TiVo once experimented with, and a higher tier equivalent to Xbox Live for $99 a year or such. As I previously mentioned, I believe investing in growing their market- and mind-share is more beneficial to their long term health than larger recurring service fees from a relatively small customer base.

    As to the amount of money they’ve spent on R&D… yeah, it’s hard to understand given the lack of tangible product. Especially when relationships with Comcast and DirecTV including some development funding. Hm.

    Glenn, Chucky, I’m still 100% HDUI. Well, I guess I’m not really 100% since it isn’t complete… ;)

    Regarding Tom Rogers, he probably saved the company. But that doesn’t make them innovative or beloved. Perhaps the CTO swap will have some positive impact.

  13. I do wonder what they spend it all on. With that type of expense, you would think we would see updated hardware yearly with regular new features.

    It will be interesting if we see a new model or the finished HDUI first. This March will be 3 years since it was released. We know the To Do list, remote play/transfer screen and Season Pass manager is coming in the next update. They might make it.

  14. Dave, at best, Tom Rogers focused TiVo into MVPD relationships. It’s not exactly a strategy so brilliant that nobody else could have conceived. Mr. Rogers used (then) impending litigation to “persuade” Comcast into fully paying for an OCAP/Middleware platform that failed (but lead further to Comcast buying TiVo Premieres and opening Video on Demand Access). It also lead to a semi-lucrative relationship with DirecTV. Outside of analytics, and “back porting” of the HDUI funded by Virgin Media UK, what exactly has TiVo innovated or improved (within recent memory, not 2006)?

  15. Their app is the best thing they’ve produced in the last 5 years, and it’s the one thing they’ve been able to update and stay on top of in a timely fashion, as far as features and bugs go. Is their app developed internally or outsourced?

    Their ROI has been so piss poor you’d think they were R&Ding pure, uncharted territory or something. We’re talking about Linux running on a Broadcom platform here… I’m simplifying that somewhat, but nothing they do, analytics included, comes close to explaining 120 million a year.

    And this year they finally hired ONE guy to evangelize the app platform.

    Their expenses should be investigated.

  16. Disappointed, perhaps anyone could have, but he did. Perhaps someone else would have done better … or … perhaps someone else would have sunk the company. It’s hard to know. But throwing those relationships at the wall and seeing what’ll stick obviously led to Virgin Media which has been a huge win. Also, the commitment to patent defense, litigation, and licensing has been very successful. In that vein, it’s not quite clear if TiVo is more NTP or RIM. TiVo got into HD way late and for way too much money, but I’m sure those gears started turning before Rogers showed up. Also, they couldn’t have chosen a more difficult market to operate in — essentially going head to head with the embedded MSOs.

    I started a post in 2007 or 2008 entitled “Licensing the TiVo Experience” but lost steam and also assumed they’d started down that path given their relationship with Nero (another failure) and upcoming video podcast. But either they chose the wrong partners, didn’t find receptive partners, or weren’t thinking as I was that they needed to diversify their business. Instead of that late and not-very-good TiVo TV with Best Buy, why not years earlier licensing the TiVo experience or building a line of products like Blu-ray and DVD players? Or microwaves? Or Harmony-esque remotes. They have been very conservative with their brand and overly concerned with confusing consumers leading to a boring one-trick-pony company to follow and an atrophying customer base. They still produce one of the top DVR products, but it’s mostly because the MSOs haven’t cared so much — consumers will often choose convenience and price over best. Honestly, I’m surprised they haven’t given up on retail yet. But I’m hopeful they keep us around as beta testers for the RCNs while they hoard their cash and pine for a more open and receptive cable infrastructure that allows them to more fairly compete. Although, as they bide their time, the Xboxes and Apple TVs may lap them and TiVo’s approach.

    Having said all that, I’m quite pleased with the mobile app, Stream, and promise of the upcoming Mini extender. Better late than never I suppose.

  17. “TiVo and Verizon just settled their patent dispute… to the tune of $250 million.”

    So, the Big Question: will this play out the same that the Comcast settlement did? In other words, will Verizon soon allow TiVo access to FIOS VOD?

  18. There were two reductions in force from TiVo in 2012. The first, in late June, removed about 6 employees (including me). The second, in mid-September, removed about 35 permanent employees and contractors. In both cases, there was no advance notice, and no de-briefing. Those dismissed included some long time employees with unique mastery of their knowledge domains.

  19. I see the new TiVo quarterly results are out. They are up to 2.94 million subscriers now. almost a 50% increase YOY.

    http://investor.tivo.com/phoenix.zhtml?c=106292&p=quarterlyearnings

    http://investor.tivo.com/phoenix.zhtml?c=106292&p=irol-newsArticle&id=1762658

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