DVR pioneer TiVo continued to struggle in the most recent quarter, adding a paltry 53,000 subscribers in the face of competition from cable and satellite providers’ own generic services.
Most of the market’s attention, however, was focused on the company’s ongoing legal dispute with EchoStar, which could prove its financial salvation.
Building off a court decision in its favor in April, TiVo this week filed for an injunction to prevent the satcaster from selling DVRs and to disable the recording functionality in most of its boxes already deployed to consumers.
A hearing on the injunction request is scheduled for June 26. If TiVo is successful, it will have an even stronger hand in asking other cable and satellite providers to settle — either through cash payments or by signing a deal to use TiVo services — rather than turn off their customers’ DVRs.
EchoStar plans to fight the injunction and pointed out in a statement that the U.S. Patent and Trademark Office recently rejected some of TiVo’s patents. DVR company shot back, however, by claiming the rejected patents were not relevant to the jury decision in its favor.
Under the existing decision, EchoStar would owe TiVo $73 million, and potentially royalties on future DVR sales. Other competitors could face the same fate (Daily Variety, April 17).
TiVo could certainly use the money, as it’s simply treading water under its current business model.
Revenue was up 20% to $56.5 million in the quarter ended April 30, but most of the extra money came from $7.2 million in one-time “development revenue” from its deal to provide advertising and optional DVR services to Comcast subscribers.
Net loss rose to $10.7 million from $857,000 in the same quarter a year ago, an increase the company attributed primarily to litigation costs, along with the expensing of stock options and aggressive pricing.
Sub adds from DirecTV, which now promotes its own generic DVR, all but disappeared in the quarter, falling from 247,000 a year ago to just 2,000.
While TiVo is focused on adding services such as “guru guides” — TV watching recommendations from magazine editors — and video from the Internet, it’s having trouble adding customers. TiVo-owned sub adds fell from 72,000 a year ago to 51,000.
For the current quarter, guidance calls for TiVo revenue excluding hardware sales, which totaled $55 million last quarter, to fall slightly to between $50 million and $53 million. Net loss is expected to rise to between $12 million and $15 million.
TiVo stock closed down 3% at $7.14 Wednesday before earnings were released.
(The Associated Press contributed to this report.)