Rovi’s $1.1B TiVo Acquisition Is About Discovery And Addressability

RoviTiVoWith additional reporting by Kelly Liyakasa.

Rovi Corp., a maker of cloud-based analytics technology for TV and media companies, revealed Friday it would acquire TiVo for $1.1 billion in cash and stock.

The combined company will be called TiVo once the deal, which is subject to regulatory and shareholder approvals, closes.

“The combined capabilities of TiVo and Rovi place us in a tremendous position to extend services across platforms and to a customer base that includes traditional, over-the-top and emerging players across the globe,” Rovi CEO Tom Carson said in a statement.

One way Rovi made money was by monetizing interactive program guides within smart-TV user interfaces, which the company saw as a “natural synergy” with the patents TiVo holds around set-top box DVR technology.

Also coming along for the ride is TiVo subsidiary TiVo Research and Analytics (TRA), a measurement and analytics business that in the past year has opened up targeting data on 2.5 million set-top boxes to partners in the digital ecosystem, including Quantcast, Clypd, Eyeview and SpotX.

TiVo also had a number of intellectual property assets that Rovi found attractive, according to one source with knowledge of both companies.

One is Digitalsmiths, a cloud-based content discovery service TiVo bought in 2014. The other is Aereo, whose assets TiVo bought at auction for less than $2 million last year. (Aereo went bankrupt after losing a Supreme Court case in which broadcasters accused it of digitally retransmitting broadcast signals without obtaining proper content rights.)

TiVo built some of Aereo’s assets into its own new set-top box, the TiVo BOLT, which provided new transcoding capabilities and support for ultra high-def video.

BOLT essentially allows a user to search for content across hundreds of distribution points like Netflix, Hulu and Amazon, which “is sort of the hidden asset in all of this,” said AdExchanger’s source.

“Rovi is looking a few years down the road,” added Randy Cook, VP of programmatic TV for video SSP SpotX. “A big topic at NAB [National Association of Broadcasters] this year was broadcaster conversion in the US to [the new ATSC 3.0] protocol, which allows ad insertion at the device level,” when that broadcaster sends a signal to a set-top box equipped with a Wi-Fi-enabled antenna.

“It potentially gives broadcasters the ability to serve addressable ads through that box and TiVo BOLT is primed for that conversion if and when it happens among broadcasters,” Cooke added.

Along with the Federal Communication Commission’s recent moves to unlock cable boxes from the grip of cable providers and traditional hardware licensing fees, the ATSC 3.0 protocol could be a real game-changer because addressability is no longer relegated to an MVPD’s own set-top boxes.

All About Discovery

The acquisition all harkens back to search.

Entertainment may be a lean-back experience, but it’s also becoming a battlefield in the war for user attention, especially as streaming service providers steal share from cable companies.

TiVo’s technology knows exactly what people are watching, while Rovi’s position in the marketplace has always been around search, discovery, metadata and analytics across set-top boxes and video on-demand. Rovi’s offering centers on helping viewers find content and helping brands, manufacturers and service providers find audiences.

At its core, Rovi is “a data company at massive scale,” noted former Rovi EVP and CTO George Durden, now SVP of tech at Undertone, in a previous interview.

That’s part of what makes this merger “the next logical step” for TiVo, the company’s interim CEO and CFO, Naveen Chopra, observed in a statement about the deal.

Because there’s almost nothing richer than intent data. There’s also almost nothing more frustrating than not being able to find what you’re looking for.

Google knows it – hence its plan to start surfacing live TV listings in Google Search – and so does Mighty TV, the app-based streaming video discovery app launched by former Admeld CTO Brian Adams in mid-April.

“From a discoverability perspective, there is a race for people’s time, to understand where they are, on which device and, obviously, to give them the tools they need to find and discover content,” said Justin Thomas, a seven-year Rubicon vet and VP of partnerships at Button, a startup that creates contextual API-based connections between apps using deep-linking technology.

But how will Rovi monetize?

Historically, Rovi has operated an ad network that allowed advertisers to extend their campaigns with video and interactive banners to content guides and third-party TV platforms, including set-top boxes, connected TV and Blu-ray players, as a way to reach consumers as they’re looking for content and making entertainment choices.

But, as Thomas noted, even though the supply chain is cleaning itself up, “ads are suffering right now, whether because of issues of viewability or fraud.”

Discoverability, on the other hand, is about capturing “intent wherever it’s being manifested,” he said, and having “your service or products show exactly in the moment someone is looking for them. This is especially important for media providers who don’t want to litter and degrade their consumption experience with ads. Discoverability actually can be a way to put the consumer first.”

Rather than ads, the monetization opportunity could be more around TV recommendations or even product suggestions – serving up something related to whatever a person is searching for.

“This deal is following a growing trend in the industry where proprietary data and large reach is the only way to thrive in or survive the tremendous shift in the way consumers are accessing media and entertainment,” said Andre Swanston, CEO of OTT audience measurement company Tru Optik.

“Whether it’s comScore’s acquisition of Rentrak, Rovi acquiring TiVo or other companies forming partnerships – everyone is trying to position themselves for the new reality of how content will be distributed, consumed and, most importantly, monetized.”

Jim Nail, a principal analyst at Forrester, agreed.

“Once the comScore/Rentrak merger went through, the bar got a lot higher for TiVo to play in the TV audience business, so they are banking that this combination gets them back in the game,” he noted. “But to me, the real driver of the deal is the way they highlight Rovi’s cloud, guide and personalization with TiVo’s cross-platform, content discovery capability.”

Updated with Forrester comment. 

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