Smarthouse is reporting that Seven Network’s Hybrid Television Services is considering bringing Nero’s LiquidTV | TiVo PC to Australia. As I covered back in September, LiquidTV | TiVo PC turns a PC into a TiVo DVR with most of the feature you get in a standalone TiVo, and a few you don’t. Seven, of course, launched the standalone TiVo in Australia a mid-year. Bringing the PC software to Australia would expand the market to media center PC users, and I’m sure leverage the guide data infrastructure in place for the standalone model.

TiVo launched in Australia with a AUD$699 price tag and no subscription fees, and it has been doing OK base on past reports. But perhaps not well enough to satisfy Seven Network. Smarthouse reports that Hybrid Media Services, which was setup by Seven to handle TiVo in Australia launched a new TiVo offer. Under the new offer, called Flexirent, users are able to rent a TiVo for AUD$37.58/month over a three year period or AUD$48.22/month with a two year commitment. That would add up to AUD$1,352.88, or AUD$1,157.28, over the terms of the agreements. Conversely, it would eliminate the up-front cost, which may appeal to some users.

For users interesting in owning their TiVo outright, but for whom the AUD$699 cost is too much to swallow in one go, a 10-payment plan is also offered. AUD$69.90 a month for 10 months covers the cost of the TiVo.

The up-front, no fees and retail options remains for user who prefer that option.

Foxtel’s General Manager Box Office, New Media and Pay-Per-View, Brenden Moo responded by saying “I was under the impression that TiVo were not going to offer a subscription service their new Flexirent offering smacks of a disguised subscription fee”. That is one way to look at it, but he may be concerned as Foxtel’s pay-TV service subscription costs from AUD$37.95 up to AUD$105.95 depending on the package, and their iQ2 HD DVR is an additional AUD$200 up-front. So a TiVo subscription package priced about the same as their low-end offer with no up-front fee could provide some strong competition.

There’s another interesting tidbit on the TiVo Australia website, while they’re using MPEG-2 today for movie downloads, by March 2009 they plan to use MPEG-4 to reduce bandwidth usage and speed up downloads. Since other announcements for Australia have later appeared in the US it makes me wonder if we’ll be seeing MPEG-4 movie downloads in the US soon.

Foxtel is TiVo’s primary competitor in Australia. While TiVo is sold by Seven Network and is a ‘free to air’ DVR used with broadcast TV, with no subscription fees, Foxtel’s iQ/iQ2 DVRs are used with Foxtel’s pay TV service. It is akin to DirecTV or Dish Network in the US, and beyond the initial acquisition fees there are ongoing monthly fees, which can be quite steep if you want the full range of channels. According to the Herald Sun, Foxtel chief executive Kim Williams took an opportunity to throw some FUD (Fear, Uncertainty, and Doubt) in TiVo’s direction:

[F]or Seven Network, “the horse has bolted”.

“The iQ is the industry standard,” Mr Williams said.

“I see TiVo as a latecomer with little to recommend it.”

Sounds to me like someone is worried, you don’t need to take swipes like this at a competitor if they’re really no threat to your business.

Seven Network, through Hybrid Television Services, has found another way to get TiVo to consumers in Australia - the Qantas Frequent Flyer program. Members of the Qantas Frequent Flyer program may now redeem their points to acquire a TiVo, or combine their points with cash in Points Plus Pay to obtain TiVo at a lower cost. If you’re a member of the Qantas Frequent Flyer program you’ll find TiVo in the Frequent Flyer Store.

Via Smarthouse.

Seven Network has release the first sales figures for TiVo in Australia, and since they went on sale in July about 12,000 units have been sold, according to the Australian Financial Review. Seven is also believed to be negotiating further retail deals with Bing Lee, The Good Guys, Retravision, and Myer, in addition to their existing partners.

“Our aim was to double the size of the digital video recorder marker, which was about 50,000 in 2007,” Mr Warburton said. “We are on track to sell 25,000 by the end of December and are confident of reaching our 50,000 target.”

The 50,000 figure excludes DVRs sold by pay-television companies such as Foxtel, which has sold over 365,000 iQ & iQ2 DVRs since February 2005. Another pay-TV vendor, Austar United Communications reported 57,744 MyStar recorders sold by late October.

Seven says TiVo sales are running ahead of targets, due perhaps to their extensive marketing campaign. Seven spent an estimated AUD$3.5 million worth of airtime to promote TiVo during the Summer Olympics (which Seven Network aired). Since the Olympics their monthly marketing spend has been roughly AUD$200,000 between TV and print.

Overall it sounds like TiVo is doing fairly well down under.

Hybrid Television Services, which was setup by Seven Network to distribute TiVo in Australia, continues to expand their retail partnerships. The latest addition is David Jones, which landed an exclusive department store nationwide distribution agreement. They join specialty stores Harvey Norman, Dick Smith, Clive Anthony’s, and JB Hi Fi in selling TiVo in Australia. They’d be on shelves in David Jones stores starting November 10th, for the same AUD$699

Via Smarthouse.

While the first broadband content for the Australian TiVo is a fairly prosaic weather widget (see the video below), details are emerging about additional features that will follow. The Australian is reporting that Seven Media Group has done a deal with video chain Blockbuster to give TiVo owners a free movie every week, delivered via broadband. By March 1, 2009 TiVo owners will have access to a catalog of over 100 movies at any one time. This will be a combination of free, advertising supported films form Seven’s library and some video-on-demand releases offered as pay per view by Blockbuster. It sounds like this will be a revolving list of films, a different arrangement from the system in the US with Amazon, Jaman, CinemaNow, and, soon, Netflix.

As in the US, there will also be interactive broadband games available to TiVo users. But, unique to Australia, there will also be basic food and grocery shopping services offered over TiVo. That’s curious, I’m not sure if that kind of service is popular in Australia. Despite buying pretty much everything online, groceries have never been something I’ve bought online. Though I know some people who use services like Peapod, and I hear grocery delivery is more common in cities.

Something else the Australian TiVo will offer is pizza ordering. Now that I can understand, and it is something I’ve suggested TiVo do in the US. I order pizza online via the web from my local Papa Johns, and I order online from other places that offering. Ordering via the web is just easier and more accurate than calling in an order, in my experience, especially when you can pay via credit card. It shouldn’t be hard to write an order front end in HME for the sites. Different vendors could do it themselves, but users would have to manually add them to their TiVo so it would be more valuable of they just showed up on every TiVo like Fandango for movie tickets. C’mon TiVo, you know it is a good idea - skim a little fee on each pizza. But I digress…

It sounds like the focus for broadband content and services on the Australian TiVo will be advertising supported, with pay-per-view on some of the premium offerings. The ad-funded content will work much like ad-supported content on the Internet with short breaks of no more than to ads before, in the middle, and at the end of the program. As broadband rates can be high in Australia, and bandwidth caps much lower than in the US, they’re approaching ISPs to offer an unmetered download service for TiVo devices, to be called TiVo Uncapped, separate from the home’s standard Internet service.

The Courier-Mail is reporting that Seven Network will begin rolling out network features to the Australian TiVo next month, including YouTube support, video on demand services, and TiVoToGo. Internet services have always been a key part of Seven Networks plans for TiVo. The Australian TiVo only works with free, over-the-air channels, which are limited in number - only 15 expected by mid-2009. To better compete with Foxtel’s pay TV service Seven will be able to use TiVo’s Internet capabilities to deliver additional content.

Smarthouse reports that Seven Network is ready to begin offering the 500GB eSATA add-on drive for the Australian TiVo. The description given in their report seems to imply that it may be more locked down than in the US:

“The storage device will be exclusive to the TiVo and will record HD Television. Consumers will not be able to attach the device to other computers or recorders. The TiVo software will automatically see the device and record to it when the storage built into the device is full”.

In the US, of course, it is a standard Western Digital 500GB eSATA My DVR Expander, and the same drive works with Scientific Atlanta cable DVRs as well as with any PC that supports eSATA. Now, this could simply be the ‘Seven Media insider’ who was talking to Smarthouse not knowing that they were talking about. It is true that once you attach a drive to the TiVo it is formatted for the TiVo and you cannot them connect it to another device without reformatting it. But eSATA is eSATA and the drive can be reformatted and reused. I tend to suspect that will actually be the case in Australia too.

Smarthouse also says Seven is set to roll out the TiVo to other retailers, now that Harvey Norman’s three month exclusive is up, including retailer Dick Smith. (What is it with Australian retailers and guys names?) Retailer JB Hi Fi CEO Richard Uechtritz says they still haven’t decided if they will stock TiVo.

Interestingly this story comes just one day after Smarthouse posted a rumor mongering story entitled “Is Seven Media Set To Dump Tivo?” In that story they claimed that ‘Seven Media insiders’ told them that sales through Harvey Norman failed to hit targets and that they were now ‘reviewing their options’. They also said it was “slammed by reviewers.” And pulled this bit from the Australian PC Magazine:

PC Magazine wrote “unlike its US counterpart, the Aussie TiVo is a crippled box. Shipping with a 160GB HD, the TiVo allows you to record up to a pathetic 32 hours of HD or 62 of SD television.

Having personally read a lot of reviews of the Australian TiVo, I have to wonder about the agenda behind this particular Smarthouse article. The reviews of the Australian TiVo have been overwhelmingly positive. Yes, there are issues, and probably the primary one is the hard drive size. But APC was also off base saying it was ‘crippled’ compared to the US box - it has the same 160GB drive. It has lacked the option for eSATA expansion available in the US, but, as above, that’s coming. And calling 32 hours of HD ‘pathetic’? A wee bit of hyperbole. That’s more recording time than the original TiVo models had at all. And more than the TiVo HD has in the US (we tend to have higher bitrates, apparently.) And most users are happy with it. I remember reading that APC ‘review’ when it first appeared, particularly because it was probably the single harshest review of the lot and the only one that I recall being wholly negative. It seemed like the author started out looking for reasons to slam the TiVo. It read more like a rant than a review.

Smarthouse goes on to say “A key problem for Seven Media is content and the emergence of IPTV which will allow consumers to download movies and other content to a HD TV screen.” Yet the author doesn’t say why this is a problem. This is odd, especially since Seven Network has stated that this is specifically not a problem, quite the opposite, since the TiVo will also server as their IPTV gateway into the home. It struck me as very strange that the author would lay this out as a problem with nothing to support the argument when Seven’s stated plans for TiVo include broadband content delivery and IPTV features.

Smarthouse then goes on to talk about Nero’s LiquidTV and declares it a threat to Seven’s TiVo offering. But while they mention it goes on sale October 15th, they fail to mention that’s only in the US, Canada, and Mexico. And really, those who will opt for an HTPC are mostly a different market from those who will opt for an STB. LiquidTV | TiVo PC is no more a thread to Seven’s TiVo box than it is a threat to standalone TiVos in the US - basically none. And that, of course, hinges on some future launch of a version for Australia. The North American version won’t do any good as you need an EPG feed to use it.

The whole article just seemed like sensationalism without any real evidence to back it up, just rumors and unfounded speculation.

TiVo today reported their financial results for the second quarter of fiscal 2009, which ended July 31st. They had a good quarter, turning in their second profitable quarter in a row, and their third ever, with $2.9 million net income and $10.6 million adjusted EBITDA. TiVo highlighted a few items in their release:

- Adjusted EBITDA for the second quarter was $10.6 million compared to a loss of $(11.2) million in the year-ago quarter, exceeding guidance
- Net Income for the second quarter was $2.9 million compared to a loss of $(17.7) million in the year-ago quarter
- TiVo service on Comcast now available in Connecticut; Comcast will also continue to fund development work for the TiVo product to expand the feature set and add support for the Tru2way infrastructure
- TiVo and Entertainment Weekly join forces to connect TV viewers with their favorite shows on an automatic basis
- TiVo successfully launched in Australia by Seven Networks
- YouTube videos now available on the TiVo service; TiVo now provides access to more television and broadband content choices than any other offering in the world
- TiVo’s recent research deal with media marketing research firm TRA ties anonymous viewing behavior to product purchases in millions of homes; Significantly changing the quality of information available to marketers

TiVo is continuing to bleed subscribers, which was expected. With DirecTV continuing to push their in-house HR20/21 DVRs are upgrades for DirecTiVo users, even with additions from Comcast, Cox, and Cablevision Mexico, TiVo lost 136,000 net MSO/Broadcaster subscribers. And while TiVo added 36,000 gross TiVo-owned subscribers, they lost 78,000 gross TiVo-owned subs, for a net loss of 42,000 TiVo-owned subscribers. This is mainly due to legacy subscribers upgrading to HDTV and opting for cable or satellite DVRs. This leaves TiVo with 1.686 million TiVo-owned subscriptions and 3.623 total cumulative subscriptions.

This may sound bad, but it is also partly because TiVo has made massive cuts in their marketing efforts to focus on profitability instead of subscriber growth. For the quarter just ended their subscriber acquisition cost was only $135, a massive decrease from the $758 of a year ago, and only a slight up-tick from the $118 of last quarter. Instead of lots of marketing, subsidies, and rebates, which drive up SAC, TiVo is focusing on working with retailers and other vendors to bundle TiVo with HDTV purchases to capture those upgraders before they pick up another DVR. They’re also focusing on their partnerships with Cablevision Mexico, Comcast, Cox, and Seven Network in Australia.

And in that area things are looking good. The TiVo launch in Australia with Seven Network has been going well and TiVo is happy with it, though actual figures have not been released. And Comcast is finally ready to start a major marketing push and to announce more territories:

In regards to our mass distribution strategy, a top Comcast executive offered the following comments on the progress the TiVo on Comcast service has made to date: “We are pleased with the progress of the TiVo service and have broadened its footprint in our New England market to Connecticut. Refinements to optimize the product’s performance have been mostly completed, significantly improving the user experience. Importantly, we intend to light up a full marketing campaign around TiVo in September and, upon this occurring, we will be announcing multiple additional markets to which TiVo will be rolled out through next year. We will also continue to fund development work for the TiVo product, which will include expanding the feature set and adding support for Tru2way infrastructure.”

Rogers stated, “Additionally, the TiVo service on Cox, which is currently in trials, is on track for a launch in Cox’s New England market later this year.”

“On the international front, Seven and TiVo successfully launched the TiVo service in Australia and because of the significant consumer demand there, retailers chose to release the product early. We are also extremely pleased with the marketing shoulder Seven is putting behind this launch as they’ve prominently featured TiVo in their marketing and programming including the Olympic opening ceremonies, their top rated morning show, and a special advertising spot they developed, which includes dozens of Australian celebrities. International distribution is an increasingly important component of our business model and there continues to be tremendous interest from international distributors for the TiVo offering.”

During the Q&A session when asked if Comcast had gotten to the point where they don’t require a truck roll for the TiVo software install, Rogers answered that that issue was a dependency on non-TiVo software and that Comcast was close to deploying the solution. It sounded like that was the gating factor for Comcast to launch the marketing effort, and that also helps explain Comcast’s satisfaction despite the delays, it doesn’t sound like it was TiVo’s problem.

During the Q&A session at the end of the call, Rogers once again mentioned a tru2way TiVo box, what the user community has started calling a ‘Series4′. He didn’t offer any specifics (unsurprisingly), but his feeling is that it will take more time for the industry to establish a national tru2way playing field to make it viable to release such a product. Personally I think that they may show something, prototype perhaps, at CES in January with the release for later in 2009 as most of the cable MSOs have pledged to have tru2way in place by July, 2009. Just my speculation.

You can get more information from TiVo’s release and key metrics.