In the spirit of the Winter Olympics, The Motley Fool is pitting companies against one another. The writers will outline why their company should win, and our very own panel of judges will decide the winner after a period of deliberation. Stay tuned for more!
If there's anything the Olympics bring to mind, it's the thrill of victory ... and the agony of defeat. Not that TiVo's (Nasdaq: TIVO ) a full-on defeat, but for the past couple of years, "disappointment" seems to be a reasonable word to describe the company.
I was once a TiVo bull -- I even owned shares long ago -- but lately it seems as if TiVo has stalled out in the innovation department. Its circle of competitive threats is growing, too.
Just a few days ago, I couldn't resist an inward groan when I read a CNET article about a TiVo marketing event -- matchmaking a handful of TiVo-loving couples in San Francisco for Valentine's Day. Is that all you've got? And how is that helping the TiVo brand? (Sadly, it sounded like the matches were duds anyway.)
In November, TiVo reported a quarterly loss, another painful reminder that the company's been taking a hit on hardware to ramp up subscribers as quickly as possible as it loses its DirecTV (NYSE: DTV ) advantage. While subscribers increased in the quarter, the lion's share of them were from DirecTV and not from its standalone service. That's certainly not what investors wanted to see.
TiVo has reported only one profitable quarter, and that's bound to continue as long as TiVo is trying to market its standalone boxes against the competition. If you look at TiVo's sales growth from January 2001 to the present, you'll see a marked slowing.
Bright spots include its agreement with Comcast (Nasdaq: CMCSA ) and a plan to allow users to download their TiVo'ed content to iPods and Sony's (NYSE: SNE ) PlayStation Portable devices. However, it's worthwhile to note that TiVo didn't have anything particularly earth-shattering to share at the Consumer Electronics Show in January.
Rivalry has evolved beyond the mere fact that cable companies offer their own generic digital video recorders, as well as increasing on-demand services. What happened to TiVo's movie-downloading plans with Netflix (Nasdaq: NFLX ) ? When word first broke, movie downloading wasn't yet ready for prime time. Apparently, the relationship is currently on the back burner because Netflix wants to focus on the high-definition format.
Given Apple's (Nasdaq: AAPL ) recent success with video in its iTunes Music Store, well, let's just say that TiVo should gulp uncomfortably knowing that video downloading has broken ground and represents another version of time shifting -- one that very well may prove more compelling. Google's (Nasdaq: GOOG ) even on the prowl with its new video store concept, which may be a little bit rough at the moment but shouldn't take too long to whip into shape.
TiVo was supposed to be a bridge between our TVs and our PCs, and right now, it feels like it's in a holding pattern. Some of us are starting to wonder if, at this point in the game, an acquisition by a more powerful company is the future for TiVo. (Fool contributor Tim Beyers said last fall that Google must buy TiVo.) It's arguable that any of the companies mentioned above might be good candidates to take TiVo under wing.
My final comment: A mere glance at TiVo's one-year chart. It certainly coincides with the distinct impression that TiVo is undergoing a quiet struggle at the moment, particularly since last fall. No, I haven't quite given up on TiVo yet. However, for a company that has had so much promise over the years, recent events -- or lack thereof -- lend credence to the idea that TiVo is a strong contender for "biggest disappointment" in recent memory.
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Alyce Lomax does not own shares of any of the companies mentioned.