Digital video recorder darling TiVo has posted its first-ever quarterly profit yesterday, earning a slight $240,000 for it second fiscal quarter of 2005. Just under a quarter million dollars may not seem all that impressive, but it takes on a healthy glow compared to the $10.8 million loss the company posted for the same quarter in 2004. More significantly, technology and service revenue increased almost 50 percent compared to the year-ago quarter, accounting for some $40.7 million overall.
TiVo says it added 254,000 new subscribers to its service during the last three months, bringing TiVo’s subscriber base to some 3.6 million. However, approximately two-thirds of those subscribers come through TiVo’s partnership with satellite television provider DirecTV. Although TiVo’s deal with DirecTV runs through 2007, DirecTV announced last month at the annual Las Vegas Consumer Electronics Show it would begin also marketing DVRs from NDS later in 2005.
TiVo’s brand-new CEO Tom Rogers emphasized that the company will sacrifice future earnings—to the tune of $20 to $25 million next quarter—to increase its subscriber base outside its relationship with DirecTV, as well as increase the TiVo subscription service’s direct appeal to advertisers. TiVo recently struck up a partnership with the largest U.S. cable provider Comcast, along with agreement with regional cable operators Cebridge and Benton Cablevision. TiVo plans to market its set-top boxes to the approximately 40 million U.S. cable subscribers who receive cable service without advanced digital services from cable operators, offering the boxes at a discount in exchange for extended subscription commitments; however, TiVo currently lacks the product inventory to sustain a major promotion, and the end-of-year buying season is just around the corner.
