TiVo released their third quarter fiscal 2008 results today:

• Adjusted EBITDA was $0.3 million, considerably ahead of guidance
• Net loss was ($8.2) million
• Goal of getting closer to Adjusted EBITDA breakeven for the year on track
• Announced relationship with NCTA and cable industry to enable cable operator installation and other support for TiVo standalone boxes
• Entered into strategic partnership with NBC to provide their advertisers with a comprehensive set of interactive advertising and audience research solutions
• Deal with Nero to bring the TiVo experience to the PC user
• Bolsters international presence with launch of TiVo service at retail in Canada

My business trip to Omaha got extended – instead of returning Monday night I’m here through Friday, perhaps longer – so I was at the customer site this afternoon and couldn’t listen in to the call live. I’ve just been able to listen to the recording back at my hotel. There are a few interesting items, aside from the previously announced SDV solution, NBC Universal deal, Carat deal, Nero partnership for PC software, and the move into the Canadian retail market.

In Tom Rogers’s presentation he stated that the Comcast up-charge for the TiVo software is $2.95/month, officially confirming what had been previously reported. And, as he said: “Our service on Comcast is now available in some non-employee subscriber homes, and full marketing efforts will begin shortly.” Comcast will also market the TiVo software through packaged bundles and ‘win back’ offers – which are specials designed to attract those who may have switched from cable to other services (FiOS, satellite, etc) back to cable. Rogers also touted Tivo’s deal with Windstream to market TiVo to their three million users.

He confirmed that the Nero deal will deliver TiVo’s “unique user interface” to PC users, which is a good sign. He also indicated that most of the sales for the PC product are expected to be outside the US.

TiVo seems to be confident that some resolution to the EchoStar lawsuit will be reached soon. Indications have been that EchoStar will seek a settlement ahead of the ruling on their appeal. “In terms of litigation, our case against EchoStar is moving closer to resolution. We were pleased with our presentation of oral arguments before the Court of Appeals and believe that our arguments were well presented on appeal.” The general feeling is that EchoStar will lose the appeal if it goes to a ruling, so they may wish to reach a more favorable settlement before their hand is forced.

Financially, TiVo blew away street estimates with a loss of only $.08 per share. Leading up to the report I’d seen estimates anywhere from $.11 to $.17 per share. TiVo added 69,000 gross TiVo-owned subscriptions in the quarter, with a net addition of 4,000 TiVo-owned subscriptions. TiVo lost 130,000 DirecTV subscribers in the quarter, which isn’t surprising as DirecTV has continued to roll-out their new MPEG4 HD channels, which require non-TiVo hardware. While the number of fully amortized lifetime subscribers continues to climb, to 190,000, so does the percentage of users paying recurring fees – now 60%. Total TiVo owned subscriptions now stand at 1.712 million, still slightly down from the peak of 1.727. And total subscriptions are 4.067 million, down from the peak of 4.444 million – though the Comcast roll-out should help slow, and perhaps reverse, that slide in the coming months. TiVo-owned subscriptions are worth much more to TiVo, with an Average Revenue Per User (ARPU) of $9.04, while non-TiVo-owned subs have an ARPU of $.91.

There is some hope that relations with DirecTV might continue to improve, possibly bringing TiVo back as their DVR vendor. A settlement with EchoStar could conceivably extend as far as TiVo becoming the DVR provider for Dish Network, but I think it is more likely that EchoStar would simply license the patents.

On the cable front, TiVo seems to be getting quite chummy with the NCTA. In addition to the SDV solution and their new attitude toward OCAP on TiVo hardware, the cable industry has agreed to be involved in TiVo installations for CableCARD and the SDV Tuning Resolver. One of the biggest headaches for users of the TiVo Series3 and TiVo HD has been the pain of the CableCARD install. If this agreement truly does result in better training of cable installers, and better support for TiVo users, that will be a good thing indeed.

During the Q&A at the end of the call Rogers mentioned that Boston is Comcast’s largest market, so they’re launching TiVo in their largest market right from the start, which is a big deal. It does sound like Comcast will be making a big push on the TiVo software when they do finally make the general launch in Boston.

Overall it seemed to be a good call, but not many surprises or things we weren’t already aware of.

Phil, thank you for the TiVo Rewards Referral.

Yesterday, in an exparte filing with the FCC, TiVo revealed potential future product plans. The first part of the filing covers the Tuning Resolver solution for Switched Digital Video.

Pursuant to this arrangement, TiVo and the cable industry have developed an external adaptor that will allow certain one-way CableCARD devices, such as TiVo Series3 and TiVo HD DVRs, to receive all switched digital signals without a cable set-top box. A key component to this solution involves the cable industry’s commitment to ensure that installation of CableCARDs and the external adapter will be easy and seamless for consumers.

That’s simple enough, and doesn’t reveal anything we didn’t already know. However, then the filing gets quite interesting:

In this proceeding, TiVo had expressed concerns about the cable industry’s OpenCable Application Platform (“OCAP”) specifications and license terms. In response to TiVo’s concerns, the cable industry has agreed to work with TiVo to make clarifications or adjustments to OCAP that may be necessary to enable TiVo to build what TiVo believes can be a viable retail DVR with OCAP. We explained that a TiVo DVR with OCAP would have a “TiVo mode” displaying all linear channels (including switched digital video enabled by OCAP) with the TiVo user interface and full DVR functionality as well as a “cable mode” running OCAP and displaying all cable programming services with the cable user interface without DVR functionality.

So this is a compromise – and I’d be happy with this. Consumers would get the full benefit of TiVo for most applications, only switching to the cable company’s software, and therefore UI, for things like PPV and VOD, and any special services offered by the cable provider. That seems to be the best compromise possible, and it is certainly better than the existing stalemate where everyone suffers. I do wonder if this is something that could be introduced in software to use the Tuning Resolver developed to handle SDV, or would this require new hardware – a ‘Series4′? I suppose only time will tell.

It is interesting that TiVo has broken with the consumer electronics industry, which has been opposed to OCAP in general and has been pushing a counter proposal – DCR+ (Digital Cable Ready Plus – unidirectional CableCARD devices, like TiVo, are based on the DCR spec. DCR+ would be an evolution to add bidirectional functionality instead of implementing OCAP).

We also expressed our belief that this refined version of OCAP was a preferable solution to DCR+ for a variety of reasons, including time-to-market and the ability to receive all of cable’s two-way services. Manufacturers, cable companies, and consumers will benefit most from an OCAP-based solution that enables the creation of differentiated retail devices such as TiVo DVRs and allows all of cable’s two-way services to reach the consumer within a reasonable time. In contrast, a DCR+-based solution would take longer to implement and result in devices with more limited functionality that would not enjoy the full support of the cable industry.

If this works for TiVo, I expect we’ll see more consumer electronics vendors dropping the push for DCR+ and adopting this OCAP compromise to bring products to market. I’d be happy to see that, since my main issue with OCAP has been the requirement to use the cable provided software for all functionality. This compromise would seem to allow product differentiation while still allowing end users access to advanced functionality.

When I first saw the press release, and this statement “today announced that they have entered into an agreement to further enable the connected digital home by integrating TiVo’s television user experience with Nero’s next generation of PC software”, I figured it was something like integrating TiVoToGo into Nero’s software, along the same lines as Roxio. But I was surprised as I continued reading:

Under the agreement, Nero will develop a software solution that will bring TiVo features to the personal computer. Capitalizing on the growing PC TV tuner market, it will answer the consumer demand for a trusted PC-based DVR experience for use with the estimated 50.8 million PC TV tuners that will be sold worldwide by 2011, according to In-Stat research report published in April 2007.

“This agreement provides TiVo with an opportunity to deliver its interface and differentiated feature set globally via the PC, enabling TiVo to use all avenues of mass distribution – from consumer electronics, to cable and satellite boxes and soon, the PC,” said Tom Rogers, President and CEO, TiVo. “We are thrilled to work with Nero, a highly successful leader in software solutions for the PC who has the ability to develop a state-of-the-art program centered on the TiVo platform that will bring the same personalized entertainment experience to domestic and international consumers on their personal computers.”

With little fanfare TiVo just announced that, with Nero, they’re going to be releasing PC-based DVR software that provides the TiVo experience.

That’s big news, the TiVo experience has always been tied to dedicated hardware. But I have mixed feelings on this, as the PC-based DVR market is very competitive and it is already dominated by products such as BeyondTV and the 800-pound gorilla that is MS Media Center. I’ve commented in the past how I expect ReplayTV’s PC-based software to crash and burn in the face of the competition, and that seems to be just what is happening.

On the other hand, TiVo has a couple of advantages. First, and foremost, is their brand recognition. ReplayTV never made it out of niche branding, while TiVo has saturated popular culture. So they will definitely have brand recognition. Second, TiVo isn’t doing this alone. Nero is an established player in the international PC video software market, best known for their DVD burning software, and they have the expertise to develop and distribute the software.

Since TiVo is sharing the risks with Nero, I think the downside is small here. And it should help spread the TiVo user base into new markets. I do hope TiVo does the right thing and makes the PC software inter-operable with standalone TiVo hardware – so you’d be able to do TTG/MRV between the PC and the TiVo, etc. This is one of the things ReplayTV got dead wrong – their PC software has nothing in common with their existing hardware platform, and there is no compatibility between them. So there is no synergy for existing users to try the PC software. The only commonality is really the brand name.

If the software truly does provide the TiVo experience on a PC, and it is priced right, TiVo has a good chance at grabbing some of the growing PC DVR software market.

From TiVo’s press release:

TiVo Inc.(NASDAQ: TIVO), the creator of and a leader in advertising solutions and television services for digital video recorders (DVRs), today announced that it has signed Carat to a comprehensive audience research agreement. Carat, one of the largest media buying shops and among the fastest growing marketing communications groups worldwide, will utilize TiVo’s unique research services to help its clients better understand the most urgent issue facing advertisers today – the impact of DVRs on viewing behavior and especially fast-forwarding of commercials. In addition to access to DVR viewing behavior, TiVo and Carat will also work together to educate Carat clients on ways to reach the fast forwarding viewer, leveraging TiVo ad solutions.

You can tell TiVo’s financial call is this afternoon – they’ve made new announcements yesterday and today. The subscription gives Carat access to both Stop||Watch and Power||Watch programs. DVR utilization is going nowhere but up and advertisers are getting serious about addressing that market. They have to evolve or die, and that’s good news for TiVo as they’re a leader in this space.

Wal*Mart is selling the Sony BDP-S300 Blu-ray Player for $348 with ten free Blu-ray Disc movies. Select five movies when you check out, and receive five more via a mail-in offer. Personally I’d probably opt for the 40GB PS3 at $399 for a solid Blu-ray player and game system, but this is a good deal if you’re just looking for a player.

Hat tip to Gizmodo.

NBC Universal has established a multi-faceted multi-year partnership with TiVo which includes a subscription to TiVo’s Stop||Watch service and reselling TiVo Interactive Tags for advertisements and promos. The agreement covers NBC Universal’s 14 television networks and 10 NBC owned-and-operated TV stations.

As part of the agreement, NBC Universal will offer advertisers the ability to purchase TiVo’s Interactive Tags in conjunction with other NBC advertising products as a way to enhance their campaigns on NBC broadcast and cable networks and owned TV stations. The tags allow viewers to click on an icon when watching a commercial to obtain more information about that advertiser and then return to the exact place they exited viewing. Tags also provide advertisers with an effective way to reach live, time-shifted or fast-forwarding viewers and to achieve deeper engagement through the opt-in requests for more information. NBC will also be able to offer its advertisers detailed reports on the results of campaigns that include TiVo Interactive Tags. Under the partnership, TiVo and NBC Universal will also work together to develop additional advertising products and will share revenue where appropriate.

Regarding NBC’s subscription to TiVo’s Stop||Watch™ ratings service, Mr. Rogers said, “We are thrilled that NBC is the first network to embrace our Stop||Watch commercial ratings service and can measure audience viewing behavior and ad campaigns on a second-by-second basis, in both Live and Timeshifted viewing contexts. Moreover, NBC can benefit by using the Stop||Watch service to evaluate the effectiveness of various efforts to retain audience during commercial pods.”

NBC Universal will also begin utilizing TiVo Record Tags in its on-air promotions, which enable one-click recordings of NBC programming on any of its broadcast or cable networks when a promotional spot appears for the relevant show. NBC will use the Record Tags to help viewers discover the full breadth of NBC programming and to drive additional viewing.

Since NBCU is an existing institutional investor in TiVo, it isn’t surprising that they would be the first network to enter into this kind of partnership with TiVo. See the press release for more details.

Blu-ray Disc sales in Europe have broken the one million mark for the year, accounting for approximately 73% of high-def disc sales, with HD DVD accounting for the remaining 27%. Blu-ray is beating HD DVD in Europe nearly 3:1, even better than the 2:1 margin in the US – though not close to the 9:1 stomping in Japan. But it is clear, HD DVD is being beaten by Blu-ray Disc around the world.

Out of nowhere, Call/Recall Inc. has dropped a press release announcing their “2-Photon-3D technology” – yet another holographic storage disc system. This technology has been the Next Big Thing for seven or eight years now, with a number of companies, big and small, making announcements – and never shipping a product. So you’ll have to pardon me if I take this new announcement with an ocean’s worth of salt.

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Thank you for the TiVo Rewards Referral, Gregory.