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Nyquist 2007 Predictions Revisited
It’s time to take a look back at 2007 and see how our predictions fared. (See “Nyquist Predictions for 2007“)
Home PCs and Home Theater Don’t Mix
Anandtech has an absolutely horrifying review detailing the trials and tribulations of setting up a Windows Vista home theater PC (HTPC) with the first HD capable TV tuner from ATI (AMD). Even with the on-site assistance of Dell (DELL) and Time Warner Cable (TWC) (with promptness and technical expertise you or I could never hope to see) it took two days to get the Windows Vista PC, external HDTV cable tuner, and Time Warner Network integrated and up and running. The resulting experience was great, though most consumers would have never had the patience or technical fortitude to get it up and running. It makes one wonder why anyone would bother to do this at all.
Nyquist Predictions For 2007
Prediction is an entertaining activity better suited for stimulating discussion than providing an absolute outlook on the future. Therefore, the bolder and more controversial, the better. Keep that in mind as you read and respond.
Xbox Does IPTV – It’s Official
Microsoft (MSFT) just announced that on November 22nd the Xbox 360 will allow users to purchase and rent high definition television and movies. I made this call back in January of 2006, and repeatedly since then (search this site for Xbox IPTV).
Pulling the Plug on Tivo
I’ve pulled the plug on Tivo (TIVO) after three years of great service. With my recent FiOS TV subscription, I needed HD capability and I cannot justify paying $800 for hardware I get for free from Verizon (VZ). I just wish I had tried to cancel my Tivo service earlier as they offered to cut the per month fee in half if I stayed. That’s a bad leading indicator for the health of this company.
Amazon Unbox Could Unbundle Too
An interesting piece of news speculates Amazon (AMZN) may be partnering with Tivo (TIVO) to use their DVR platform.
Apple Overload and Zune Confusion
I’m tired of reading about Apple’s ho-hum iTV announcement. And the Microsoft Zune strategy is incomprehensible. I don’t want the new PG-13 Microsoft that everyone likes. I want the old, evil, R-rated Microsoft you’re not sure you like.
Tivo Pulls the Plug on Echostar
A final injunction has been handed down by the Texas court handling the Tivo-Echostar patent infringement case. Echostar will not only pay $89M in cash damages, but will also have to disable nearly all customer DVR’s in the field within 30 days.
In a press release, Echostar will now appeal at a federal level. They also indicate that existing customers are not impacted by this court order, even though a scan of the court order clearly shows that they must cease operating all but 100k+ of their DVRs. That’s right, they need to settle or shut down all of their customer DVRs.
Tivo – The Road Not Taken
Davis Freeburg, the best Tivo (TIVO) blogger on the planet, has a thoughtful post at Thomas Hawk’s website. He draws parallels between the advertising ‘upfront’ media buys and where Tivo is eventually heading.
All and all it is interesting watching TiVo as the vanguard of where advertising is headed on your television. Advertising, ironically enough for an ad zapper, is probably more important to TiVo than just about anything for them right now. While TiVo makes far more money from a standalone subscriber, the explosion of TiVo users in the years ahead are more likely to come from the major cable deals that they are striking with folks like Comcast (and many more surely to come shortly). In these deals TiVo makes much less money per subscriber but is entitled to valuable advertising revenue from a far greater audience.
Davis appears to be of the opinion that Tivo can have it’s cake and eat it too – win big deals with companies like Comcast while extracting ad revenue bundled with broadband content distribution.
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Tivo – Barron’s Reports
This weeks Barrons has a short article ($$$ link) on Tivo (TIVO) that highlights the acquisition option as well as the need to pursue Cablecos for licensing deals. No new analysis beyond what I’ve written over the last few days, but the article is getting media attention so I thought an excerpt was in order.
With a name that’s become a verb, plus great software, TiVo could be acquisition bait. But its share of DVRs is on course to be eclipsed this year by Scientific-Atlanta (SFA) and Motorola (MOT), the two largest cable set-top makers.
Most of its subscribers come from a deal with DirecTV (DTV), the satellite operator, which pays TiVo $1.15 a subscriber, and accounts for nearly 70% of TiVo’s users and 20% of its revenue. DirecTV last week extended the deal to 2010. It won’t market TiVo’s service, but the deal prevents TiVo from losing existing customers.
Last week’s jury verdict may boost TiVo’s chances to sign up cable operators other than Comcast (CMCSA), with which it already has a deal. Cable guys will find it difficult to work around TiVo’s patents, says Terence Clark, a lawyer who heads the national intellectual property practice at Greenberg Traurig. That could force Time Warner Cable and Cablevision (CVC) into licensing deals.
But the case doesn’t solve TiVo’s most pressing long-term problem. It still has a long road ahead as it tries to win over cable operators with its patent claims.
A buyout may in fact be the best exit strategy for TiVo. In the meantime, selling on Thursday’s pop in TiVo shares may be the best exit for investors. What lies ahead are many years of knocking on cable operators doors, a long, long story with no fast-forward button in sight.
Hat Tip – Seeking Alpha
