TiVo Gains Momentum In Q2

What a difference a year makes. On September 10, 2001, Business Week Online printed the following from a feature story on TiVo, the digital video recorder company that was struggling at best: “Despite an early lead in the personal video recorder business, as well as critical accolades for what the company calls "time-warping" technology, TiVo is fighting for its life.”

Yesterday, TiVo advanced its case as a long-term player in the advertising technology field, announcing revenue for Q2 at $23.9 million, nearly six times the revenues of $4.1 million it reported for the same period last year. Gross profit on service and licensing revenue for the quarter was a record $16.3 million, a margin of 68%. During the second quarter, TiVo added 42,000 net subscribers, bringing the total subscriber base to approximately 464,000. TiVo's subscriber base has more than doubled in the past twelve months. From fighting for its life a year ago, TiVo now has momentum.

“They have developed a killer application that fits the American lifestyle perfectly,” says Michael Crawford, president of Dallas-based media consultancy M/C/C. “They have enabled consumers to access news entertainment when they want to access it. They have raised the level of quality, in my opinion, of the whole TV experience.”



That momentum has some ad execs scared still. TiVo’s built-in ability for users to skip commercials on recorded programming has drawn the ire of brand marketers, agencies and TV networks. But TiVo has expanded this year to include clients like Best Buy in exclusive ad deals that allow subscribers access to exclusive product information, essentially creating its own ad formats. Instead of positioning itself as the ad zapper, TiVo is starting to make inroads as an ad facilitator.

“And if I was running an ad agency, that’s why I wouldn’t be concerned with the threat from TiVo,” says Crawford.

Subscriptions and licensing maintain the lion’s share of TiVo’ revenue. Those numbers are likely to grow as the year progresses as the company also announced that Sony will offer a new digital video recorder with the TiVo service in the U.S. market this holiday season. TiVo also announced that it plans to broaden distribution for its TiVo-branded Series2 digital video recorder, announcing deals with national retail partners including Tweeter, Amazon.com and Ultimate Electronics. Best Buy, The Good Guys! and Abt Electronics have already signed on for the Series2 product.

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