TiVo (TIVO)

[HankRearden]

TIVO shouldn't have even survived. The world basically stole their IP and ran with it. The very fact that they did survive, amassed $1.6 billion in litigation settlements and invested 30% of the past decade's worth of revenue into R&D to transform themselves into a MSFT "Windows" of TV is largely to the credit of the "clown", Rogers.

On sub upside - Rogers was referring to the opportunity in deploying their UI/software, not the DVR tech. Their are 900 million global pay-TV subs and TIVO has 4.5 million. Eliminate 100 million globally for the Comcast's and other large players in the US and 100 million on the low end for developing markets, and you have 700 million in the middle. That's 0.65% penetration!

On ARPU - yes, TIVO generates $2 and up in ARPU in the US by way of the fact that the UI needs to be more sophisticated to integrate greater amounts of OTT content vs. what you have overseas. They get ~$0.85 in ARPU at Virgin. This gap should close over time as overseas markets need to offer more OTT content in conjunction with cable.

Overall, I thought the Needham conference comments were excellent. Rogers did a great job of articulating strategy/opportunity.

Ultimately, TIVO is a little MSFT Windows, a little GOOG search, a little NLSN ratings/audience measurement.

That ain't a bad combo. Market just now beginning to figure out.