Does TiVo has a future beyond the DVR?
Dave Shull certainly hopes so. The former Weather Channel CEO joined the company as president and CEO back in May, and when I spoke to him last month, he insisted that he’s excited and optimistic about the company’s prospects.
In fact, he said the DVR business “is not really TiVo” anymore. And the proliferation of streaming services is exactly what’s creating a big new opportunity for the company, one where it can help consumers navigate the seemingly overwhelming streaming landscape.
“Let’s embrace the chaos,” Shull told me. “The more streaming, the better.”
In the interview below — which has been edited and condensed for clarity — we discuss why he took on the job, how he plans to split TiVo into two companies and his plans for TiVo+, the company’s ad-supported streaming service (which launched earlier this week.)
TechCrunch: It seems like part of the goal with you coming on as CEO is this idea of reinventing the company for the world of streaming.
Dave Shull: We fully embrace the streaming wars at TiVo, is what I would say.
A little bit of context. I’ve known the company for years, because I’ve been familiar with some of the technology pieces that they had in the IP portfolio. But before I took the job, I talked to CTOs at some of the major operators around the world and said, “TiVo, right? I mean this is a company I’ve heard of, but are they still around?” And the answer consistently was, “Yeah, it’s actually the best technology out there.”
So I started talking to the board and eventually I get the job offer. I walk into a Best Buy and I pick up a Roku box and a TiVo box. I install the Roku box. It’s a brilliant installation process, absolutely brilliant. But then what it gives you is a bunch of different tiles for each of the apps. And so you have to figure out, okay, was that show on Netflix or Hulu?
The TiVo experience was a little bit — it needed some more work, is the polite way to say it. But once I had it installed, it’s taken my live TV and my on-demand Prime, Netflix, Hulu and some digital content and pulled it all together. That’s pretty cool because it’s allowing me to find the entertainment that I want to watch tonight, right?
And so we’re betting on this chaos of applications that are out there with the streaming wars, saying people are having fatigue from subscriptions and they are desperate to find an amazing way to go back to enjoying watching their TV again. They want someone who can bring all this entertainment together — on-demand, live, digital — and make it fun to find, to watch TV again. So that’s our mission. Very simple.
I came in three months ago. The first mandate is, we’ve decided to split the company. So about half of the company is an IP portfolio, 5,000 patents. Then we have the TiVo product base — and everyone thinks of TiVo as this DVR that you buy at Best Buy. That’s really not TiVo, that’s a tiny fraction of our customers. We have 22 million households around the world that use TiVo to provide exactly what I just said, which is this amazing ability to find entertainment.
And for me, the opportunity that I see is, we did a survey recently of 4,000 consumers and on average they’re using more than seven applications each, which is crazy, right? And more than half of them said, “Absolutely, I need someone to help me kind of search across all of these apps and I need it to be someone who’s neutral, so they’re not trying to jam content down my throat.” And so I think that is the problem that we try to solve at TiVo.
TC: You mentioned the DVR that you buy at Best Buy, that it’s just a small part of that 22 million number. So for the rest of that audience, usually there’s no hardware at all? It’s just built into the TV?
DS: No. What happens is, a cable operator will come to us and they’ll say, “I can either build a system myself, I can license something from Comcast X1, which is a great platform, or if I want someone who is neutral and I don’t want to do it myself, I’ll come to TiVo.”
Some of the big cable operators or satellite operators in category one have [also] said, “We’re going to build our own system, but we still want the best-in-the-world algorithms for helping us find entertainment content.” And so they licensed that from us on a separate basis. That’s above and beyond that 22 million households, that’s another tens of millions of households worldwide.
TC: Part of the reason I ask about the 22 million is, I’m curious to what extent do all of those households know that they’re using TiVo? And to what extent is it potentially a white-label product that they’re using but don’t know it?
DS: It’s a mixture. I don’t know if it’s half and a half, but it’s a mixture.
TC: Is that something you want to fix, or is that fine with you?
DS: I would prefer for the TiVo brand to be unified across the whole footprint, so we’ll work our way there.
But we need to do it in a way that’s operator-friendly. I want to monetize this platform more than what we do today, helping consumers find new content that [can be sponsored]. But I want to do that in a way that sharing the revenue back to the operators. That’s something that my competition doesn’t do. And so, to the extent I have a more unified branded platform across operators, I can generate more revenue for all of us.
TC: That leads into this upcoming offering [TiVO]. Is that something that TiVo is selling, or is it the cable operators selling it?
DS: Early October, we’re going to announce TiVo+, where we’ll have dozens of channels, digital channels, that are going to be included now in the TiVo platform. So it will be your live cable systems, Netflix, Hulu, Prime, whatever else, all of that will be integrated into a single user interface. I think that’s a pretty unique offering.
TC: To what extent are you thinking about devices beyond the TV?
DS: We have a mobile development group, but candidly, I am very focused on unifying the 22 million households we already have, TV households, and then trying to double that number.
I don’t know how long it’s going to take us to get there. We’re not putting a forecast out there, but trying to get us to think really, really big with regards to TVs first. And then to the extent that mobile devices supports that, then that’s important.
TC: As soon as you say that you’re operator-friendly, my first thought was, “Yeah, that’s the world that most people live in now.” And then my second thought was, “Well, the people who are 10 or 20 years younger than me, that’s not necessarily the world that they know.” The world that they know is just a world of Netflix, right? Maybe Disney+ when that launches. And YouTube, of course.
So do you feel like your model is mostly going to be embraced by that traditional TV viewer who’s starting to become interested in streaming, or do you think you can get some of that younger, cord-cutter audience too?
DS: We can definitely get the cord shavers. I think we can get the cord cutters because the cord cutters are still going to need a broadband connection of some sort, right?
Maybe five years from now it’s 5G. It may be Verizon offers that and not your cable company. And so the question is, how do I sell through those data pipe relationships? Which is different than that twenty-something going down to Best Buy.
I think that’s all I’m suggesting, is that the platform can be deployed through a co-marketing relationship with the operators. I could do a revenue share back to the operators. That’s just a very different model than saying I’m selling directly only to the consumer. We sell to the consumer today, so I’m not saying we won’t sell to the consumer, [but] that’s not my primary focus as a company.
TC: It sounds like you expect the model to evolve along with whatever the “skinny bundle” will look like in the future?
DS: Here’s what I love about this position: I don’t care. Let’s embrace the chaos. The more streaming, the better. The more subscriber fatigue, the better. Right? We’re all-in on that. It’s a nice place to be.
TC: The thing I wonder about is, right now we are in this moment of chaos and opportunity. But in a few years there could be a lot of consolidation. The chaos that we see now, it won’t necessarily continue indefinitely.
DS: I’m pretty sure it won’t continue indefinitely. I think I’ve been surprised at the number of small media companies that haven’t consolidated yet. So that’s one.
Number two, you see all these emerging media brands, and you guys all have apps and websites and everything else, right? I think there’s a consolidation of more of the traditional players, but there’s still this emergence.
And so there’s this cycle, and so far it hasn’t reduced the number of content options or entertainment options. It may be e-sports as opposed to the NFL, but there’s definitely an ongoing trend where more and more of that stuff is proliferating.
TC: You also mentioned that you’re basically splitting the company into the IP business and then the rest of it. So, where are you in that process and what will that look like when it’s done?
DS: We’re a publicly traded. What we’ve said publicly is that by the end of the first half of next year we will be done with the split.
I’m trying to do it as quickly as possible. At The Weather Channel, it took three months to do that when we sold the digital app off to IBM. We then kept the TV business separate.
The timing is really driven by SEC review issues, IRS review issues. It’s really driven by financials and tax issues. But we’re standing up separate boards, separate management teams, separate office space, complete separation of the organizations.
TC: And then at the end of that, you would be the CEO of the non-IP business?
DS: Right now, I am the neutral arbiter between the two of them, who loves both my son and my daughter equally — and I happen to have one of each, my favorite daughter and my favorite son. If I ever have another kid I’ll have big problems.
It’s interesting. When I talk to investors, I talk a lot more about IP. When I talked to the consumer press I talk a lot more about the product.
TC: Organizationally, how much have you been continuing with what was already in place, and to what extent have you had to make changes there?
DS: Quite a bit of change. We’re doing two things. One is, we had different business groups for all these technology bits and pieces that I mentioned. Each of those business groups had separate finance and support.
A few weeks ago, we removed all those business groups. So on the product company side, there is one product company, one engineering team, one product team. On the IP side, it’s one research team. There still is a joint sales team that sells both of them, so we’re in the process of splitting that sales team, finance, HR, general counsel.
Candidly, I’ve made some cost reductions. and that’s because the IP company’s extremely profitable, the product company needs to be a little bit more profitable. And so I think we’re going to get to a place where we’re in a really good spot before we spin out publicly.
TC: As soon as you talk about building this kind of service, everyone sort of assumes, A) you’re building a Netflix competitor, and B) that means you’re going to start making shows and movies of their own. Do you want to address that?
DS: We’re not going to make shows of our own. We are aggregating the best content services out there, whether it’s live, or SVOD like Netflix and Hulu, or digital entertainment. We very, very, very intentionally want to stay neutral, which means we’re not going to have our own content. Full stop.
TC: Can you say anything about what the response from the streaming services has been as you try to include them in these discussions? Because I get the sense that at least Netflix seems very uninterested in being part of these larger navigation systems. — they want everyone to just go to Netflix.
DS: I would say Netflix has been a great partner to us. They certainly have the best market share out there. And we work hard to keep that partnership intact.
For the smaller guys that we’re bringing on that don’t have the exposure, they’re thrilled to get the platform exposure. So it’s a different conversation.