After rumors that Rovi was in negotiations to buy TiVo surfaced earlier this month, the company confirmed the $1.1B cash and stock deal on Friday. The combined 6000 entertainment technology patent portfolio that TiVo-Rovi will own must surely make the rest of the industry nervous, particularly as neither company has been shy to sue in its defense. What more does the new company, which will retain the TiVo name, have to offer?
TiVo’s interim CEO Naveen Chopra, whose fate remains unclear in the combined business, said TiVo had fundamentally changed how people consume TV and the company would continue with that goal in mind moving forward. He laid out four key areas the combined company is an improvement over the two separate entities.
“First, [the combined companies] will create the market’s largest entertainment software provider with hundreds of operator, consumer electronic and content owner relationships”
Comment: Rovi and TiVo are both key vendors to the pay TV market, though their approaches are significantly different. Rovi, which has been losing ground in the area of operator guides, remains dominant in metadata. TiVo has found success, particularly with smaller operators, in providing DVR and multiscreen client solutions.
The combined company certainly represents an expansion in reach, though not dramatically so. TiVo contributes just 17 or so operators to Rovi’s more extensive list. TiVo provides little lift to the joint company in the areas of CE and content owner relationships.
“Second, there are clear opportunities to combine product offerings and create end-to-end solutions for service provider partners. We can integrate and bundle software, cloud services, metadata, advertising and analytics.”
Comment: Rovi has built a successful business delivering media software for devices, anchored by the assets from its 2007 Mediabolic and the purchase of Gemstar/TV Guide in the same year. The company also delivers metadata and guides to a large swath of pay TV operators in the US and around the world. TiVo has built a strong business in the delivery of DVR and multiscreen software solutions to operators in the US and Europe. The combined company will certainly have a broader reach, though it’s not clear there is much to be gained in synergies between the two solutions sets since they are largely overlapping.
“Third, our combination will allow us to apply significant R&D capability and leverage our consumer DNA across an even broader group of products and customers.”
Comment: TiVo continues to provide innovation in DVR experience, as well as great hardware implementations. I have praised the unification of online and traditional television in products like Roamio and Bolt. The designs of the hardware delivering these experiences also help propel the overall industry forward.
Rovi innovates in the area of metadata and analytics to allow the creation of search and discovery solutions. The addition of Veveo in 2014 brought data intelligence into the mix to allow the company to deliver exceptional, discovery, and targeting solutions. TiVo’s Digitalsmiths also provides innovation in search and discovery, though it’s not clear if the functionality overlaps or expands Rovi’s existing capabilities.
“Fourth, we will have an opportunity to pair TiVo’s unique viewing data with Rovi’s analytics tools and create a valuable data analytics platform with enhanced targeting capabilities.”
Comment: Analytics should be a major opportunity for the new company. TiVo Research takes the data gathered from TiVo DVRs and multiscreen apps and uses it to create a robust targeting solution. Combining that with Rovi’s extensive metadata and analytics tools should provide a better solution for targeted delivery of advertising and content to consumers.
Alas, nowhere in the press releases and executive comments related to the Rovi/TiVo deal did I find a strong statement that the company remains committed to a standalone retail presence. I urge the company to keep selling and innovating the DVR direct-to-consumer. Though TiVo only has around 1M of its own subscribers, it helps the company trial and deliver market leading features that later feed into operator versions of the product. As well, the TiVo subscribers fuel the TiVo Research business directly.
Why it matters
There is a clear benefit to combining the extensive IP and litigious natures of TiVo and Rovi.
Smaller benefits are delivered by combining technologies and customer bases.
There has been no clear statement that TiVo will continue to sell the iconic DVR direct to consumers.