TiVo Teams with Samsung

A leading provider of advanced television services and personal video recorders (PVRs), TiVo Inc. (TIVO) announced a partnership with the premier provider of home solution and telecommunication technologies Samsung Electronics Co. Ltd.

Under the collaboration, the companies will jointly build an advanced, TiVo-ready, high definition PVR set-top box for digital video broadcasting (DVB) operators. The new PVR set top box will hit the market in 2011. Financial details on the deal were not divulged.

The advanced high definition (HD) PVR will be initially available to European DVB networks and later on will be added to non-PVR devices and additional platforms worldwide.

Samsung has licensed TiVo’s Hardware Porting Kit and the new set top box will allow operators to provide a cost effective and advanced television solution. As per the deal, Samsung’s next generation set-top box will incorporate the company’s linear television, video on demand and broadband content facilities in intuitive user interface. This will enable operators to deploy PVR set-top boxes along with TiVo’s enhanced consumer experience.

Management pointed out that the combination of the company’s interactive television software with Samsung’s solution will help operators improve time to market, decrease development complexities, reduce implementation costs and provide an enriched television experience.

We are of the opinion that TiVo will attain success on the back of new wins and partnerships, which will open up major new markets and licensing opportunities for TiVO.

To expand its global footprint, TiVo plans to roll out new services and enter into partnerships. Earlier, TiVo inked an international deal with Technicolor SA (TCH) (formerly known as Thomson Inc.), a set-top box manufacturer to develop high-definition PVR set-top box for operators worldwide.

TiVo had announced a partnership with Conax, a conditional access provider to offer European multi-channel operators a fully comprehensive end-to-end solution.

TiVo also partnered with Virgin Media, Inc. (VMED) to develop interactive programs for building middleware and interface Virgin Media’s next-generation high-definition set-top boxes in the U.K. Virgin Media will embed the TiVo DVR service into its set-top boxes and will roll out in early 2011.

TelstraClear plans to launch a digital video set-top box/ personal video recorder to its cable TV customers, thereby creating competitive pressure for TiVo in this segment.

Intense competition from cable and satellite providers such as Comcast Corp. (CMCSA), Cox, Dish Network Corp. (DISH) and DirecTV (DTV) are threatening TiVo’s digital video recorder (DVR) business.

The company also faces competitive threats from Motorola Inc. (MOT). Cisco System’s (CSCO) acquisition of Scientific Atlanta that makes digital video recorders, cable modems, cable set-top boxes and IP TV networking gear for service providers, adds to the competition.

The DVR market is still growing rapidly with penetration expected to reach up to 50% in the next 3 to 4 years. TiVo has made significant strides, differentiating its products from the generic DVRs offered by cable providers, which perked up its sagging market share and increased revenues.

Approximately, 29 million households had DVRs in calendar year 2009, which the company expects to increase to over 57 million by 2012. Furthermore, the number of DVRs per household is growing from one to three.

According to market research firm eMarketer, there have been approximately 44.6 million DVRs shipped globally and this number is expected to grow significantly moving forward. We believe TiVo is well positioned to benefit from this growth, attributable to its diversified portfolio and significant partnerships globally.

Our long-term Neutral stance on the company indicates that the stock is expected to perform in line with the overall U.S. equity market for the next 6–12 months. The stock has a Zacks Rank of #3, a short-term Hold rating.

TIVO INC (TIVO): Free Stock Analysis Report

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