TiVo beats analysts' estimates in Q4, still loses money
TiVo's been riding the proverbial wire for years now, and while there was some bright news from the Alviso-based firm's Q4 report, things still aren't looking too peachy on the whole. During the outfit's Q4, it managed to beat analysts' estimates with a loss of "just" $6.4 million "as expenses fell and sales of older-model units were better than expected." Reportedly, the loss equaled 6 cents per share -- much better than the expected loss of 11 cents per share. According to Chief Executive Tom Rogers, the year it just closed was its "best annual performance in its history," but when that performance was losing $31.4 million, we don't even want to think about a poor year. Still, Mr. Rogers assured investors that its newfangled partnerships with cable and satellite TV providers would help "narrow the gap toward profitability," but we still don't see poor TiVo rising from the depths just yet.
Filed under: Industry, DVRs, Set-top boxes, Others
Reader Comments (Page 1 of 1)
Pipper @ Mar 11th 2008 5:53PM
How are they not making money? I mean, they're well known, people that use them are fanatical, and the subscription costs are fair all around, with occasional lifetime offers once and a while.
I'm not sure how a subscription based product as popular as this can't be turning a profit. I've tried some of the alternatives, and I've yet to see anything that would come close.
Mike Peluso @ Mar 11th 2008 7:23PM
I don't get it either.. I have $1000 invested in my TiVo system with the life time subscription and all I really cost them is programming guide updates and commercials. If this is the model they use, why in gods name are they not making money?
MegaZone @ Mar 11th 2008 8:54PM
1. Subsidies. Nearly every TiVo box has been sold at a loss. The TiVo HD is not subsidized when purchased from TiVo.com, but it still is at retail - the cut for the retailer is basically a subsidy. (In other words, it costs TiVo around $300 to produce & distribute the box, and that's the MSRP. But the retailer needs to profit, so the wholesale price is a loss for TiVo.)
2. Marketing. On top of subsidies, TiVo has marketing costs to help sell the product.
3. Engineering. TiVo hardware and software doesn't magically appear, it costs millions to develop.
The subscriptions have to cover a lot more than the cost of providing the guide data. It has to pay off all the R&D, the subsidy loss on the box sale, the subscriber acquisition cost, the cost of regulatory compliance, etc. TiVo doesn't seen any real profit off a new subscriber for a couple of years, or longer depending.
They're getting closer to profitability, but part of that strategy is also accepting slower growth. They're cutting subsidies and marketing costs, but that also means accepting fewer new subscribers as the cost of getting a new TiVo goes from effectively free to $200-$300.
DrXym @ Mar 12th 2008 6:36AM
I don't understand how they could possibly lose money. Their boxes are expensive (i.e. not subsidized), they sell a subscription to their listings, they own all the timeshifting patents, and they're starting to sell content such as download movies. Where are the downsides?
Pipper @ Mar 12th 2008 10:59AM
I don't buy being sold at a loss. The processor and drives in them are fairly cheap components these days. I could see when they first came out it was this way, but nearly a decade later the costs for processor, memory, drives, etc have dropped so dramatically it would be absurd to think they still lost money.
As the posted above me mentioned they have pretty much the entire library of patents when it comes to DVRs, so they should be getting an absolutely huge penny every month from cable companies, satellite companies, and their DVR competitors, which there are many.
I still don't get it.
gt @ Mar 12th 2008 4:01PM
it does stink, but i dont think they are seeking the revenues they should from those patents.
also, it is not only the cost of the components when they talk about selling the hardware at a loss, you're also factoring in r and d