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Rovi Stops Selling Fan TV Devices, TWC to End Service Next Month (Exclusive)

Rovi-owned Fan TV is getting out of the hardware business: The San Mateo, Calif.-based subsidiary stopped selling its Fan TV set-top box this past Friday, and is winding down a partnership with Time Warner Cable that integrated the operator’s live programming with streaming services next month. “We’ll be transitioning folks to our recently launched Android TV app over the next four weeks,” said Fan TV founder Gilles BianRosa in an emailed statement.

Fan TV informed existing customers of the changes a few days ago, and is offering anyone who bought the company’s $150 hardware a free Nexus Player streaming box device, which runs Fan TV’s Android TV app. However, the app won’t offer access to Time Warner Cable’s linear programming anymore, and instead mirrors the functionality of FanTV’s mobile app on the big screen.

Fan TV, which was previously known as Fanhattan, launched its set-top box with much fanfare in early 2013. The then-startup collaborated with famed designer Yves Behar to build a streaming box like no other: Instead of a traditional remote control, Fan TV came with a button-less remote control that basically functioned like a trackpad for couch potatoes. The device also directly integrated with live TV feeds from pay TV operators, combining live television and streaming services through the same interface.

Fan TV ran a brief test with Cox in Southern California in 2013, but the operator ended the partnership prematurely. In March of 2014, Fan TV seemingly struck gold with a partnership with Time Warner Cable, which integrated its cable bundle with Fan TV’s hardware. The operator pledged to promote the device, which was being sold by Fan TV for $149. “The Fan TV experience is a leap forward for the cable industry,” said Time Warner Cable’s Video SVP Mike Angus at the time.

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However, the partnership was anything but a home run. Fan TV started shipping its device to Time Warner Cable customers in July. Regulatory disclosures show that by the end of September, the company had only booked a total of $7000 in revenue for the first three quarters on 2014. Fan TV only sold a few dozen of its streaming boxes during those early months, but it expected to sell thousands. As a result, the company was forced to take a write-down of $1.1 million for unsold inventory.

This contributed to mounting financial issues at the company, which already had a hard time raising new money. In October of 2014, Fan TV got acquired by Rovi for $12 million, after having raised an estimated $40 million over multiple rounds.

The Rovi acquisition also led to strategic changes at Fan TV. The deal “shifted our focus towards expanding our software offering globally,” said BianRosa, adding: “In parallel, our partners at Time Warner Cable found themselves in some merger activity of their own.”

The merger between Comcast and Time Warner Cable, which was eventually killed by regulators, put the breaks on plans to promote Fan TV to tjhe operators customer base during the fourth quarter.  “We didn’t see Time Warner supporting it because they were being acquired by Comcast,” explained Rovi CFO Peter Halt at an investor event earlier this year. Comcast had its own next-generation set-top box in place, leaving little room for Fan TV after the acquisition.

The startup had planned to introduce a second generation of its streaming box with an integrated DVR in early 2015, but ended up scrapping those plans. BianRosa also blamed the lack of streaming services on the box for its failure: “While consumers love the Fan TV experience, it obviously depends on critical mass of content on each platform it launches on. We have critical mass of content on iOS, Android Mobile, Android TV and web. We didn’t have it in this instance.” One of the key services missing from the Fan TV device was Netflix.

And while Rovi executives initially seemed committed to the Fan TV hardware, they quickly began to strike a different tone. Halt described the partnership with Time Warner Cable as “really more of a marketing tool” at the same investor event, and went on to say: “We are not in, and don’t want to be in, a business that’s dependent upon any relationship with the hardware provider.”

In other words: Fan TV may have built a nice set-top box, but Rovi just doesn’t want to be in the business of selling boxes. Instead, it wants to sell Fan TV’s guide to operators. To to so, Rovi has continued to invest into the Fan TV team, which has recently released apps for Android mobile devices and Android TV, and now employs more than 50 people, according to BianRosa.

“Fan TV is increasingly being developed and marketed alongside Rovi’s other next generation products like Rovi Search, Recommendations, and Conversation.  Global service providers can either take the full Fan TV solution, or buy modular features (delivered via APIs) to incorporate into their own in-house offerings,” he said.

Rovi executives are expected to share an update about those efforts — and possibly also address the end of the Fan TV box — during Wednesday’s Q3 earnings call.

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