Post by dkennedy on Nov 30, 2005 9:18:45 GMT -5
Can TiVo Survive Without DIRECTV?
November 30, 2005
TV Predictions.com News Release
TiVo, the Digital Video Recording service, yesterday reported a smaller than expected loss for the third quarter. However, the company's stock dropped 10 percent after it forecast losses between $17 million and $22 million in the fourth quarter.
Why is TiVo so pessimistic?
DIRECTV, TiVo's longtime marketing partner, recently stopped marketing the service, choosing instead to promote its own DVR. The potential impact of that decision can be found in TiVo's third quarter report -- more than 90 percent of TiVo's new subs came from its marketing alliance with DIRECTV. (TiVo added 434,000 subs in the third quarter, but 379,000 were DIRECTV subs.) In previous quarterly reports, the DIRECTV subs accounted for only approximately 70 percent of TiVo's new customers.
So if it weren't for DIRECTV, TiVo would have added just 55,000 subs in the third quarter. In last year's third quarter, the DVR service added 103,000 non-DIRECTV subs.
So, the question is: Can TiVo survive without DIRECTV?
The company has increased its marketing efforts to boost non-DIRECTV retail sales, which will help contribute to that fourth quarter deficit. And TiVo continues to pursue licensing deals with cable operators. (TiVo has a licensing agreement with Comcast, but it won't go into effect until late 2006.) But until it snags a new partner, the company's subscription growth is likely to be dramatically slowed.
And the timing of that is particularly bad. Cable operators are quickly signing up new DVR customers so TiVo's potential market is getting smaller every day.
To date, TiVo's executive team has done an exceptional job of managing its finances. In the second quarter, it even showed a profit for the first time, although it was a small one ($240,000). However, the company now faces its greatest challenge.
November 30, 2005
TV Predictions.com News Release
TiVo, the Digital Video Recording service, yesterday reported a smaller than expected loss for the third quarter. However, the company's stock dropped 10 percent after it forecast losses between $17 million and $22 million in the fourth quarter.
Why is TiVo so pessimistic?
DIRECTV, TiVo's longtime marketing partner, recently stopped marketing the service, choosing instead to promote its own DVR. The potential impact of that decision can be found in TiVo's third quarter report -- more than 90 percent of TiVo's new subs came from its marketing alliance with DIRECTV. (TiVo added 434,000 subs in the third quarter, but 379,000 were DIRECTV subs.) In previous quarterly reports, the DIRECTV subs accounted for only approximately 70 percent of TiVo's new customers.
So if it weren't for DIRECTV, TiVo would have added just 55,000 subs in the third quarter. In last year's third quarter, the DVR service added 103,000 non-DIRECTV subs.
So, the question is: Can TiVo survive without DIRECTV?
The company has increased its marketing efforts to boost non-DIRECTV retail sales, which will help contribute to that fourth quarter deficit. And TiVo continues to pursue licensing deals with cable operators. (TiVo has a licensing agreement with Comcast, but it won't go into effect until late 2006.) But until it snags a new partner, the company's subscription growth is likely to be dramatically slowed.
And the timing of that is particularly bad. Cable operators are quickly signing up new DVR customers so TiVo's potential market is getting smaller every day.
To date, TiVo's executive team has done an exceptional job of managing its finances. In the second quarter, it even showed a profit for the first time, although it was a small one ($240,000). However, the company now faces its greatest challenge.