TiVo Inc. (TIVO) has recently entered into a partnership with Flingo, a provider of Smart TV applications and TV platform technologies. The partnership will help TiVo to gain access to several TV applications and video contents.
By integrating Flingo applications into TiVo set-top boxes, TiVo will now be able to stream video content from TMZ, A&E, History, Showtime, TV Guide and other content providers. In addition, some exclusive contents will be made available to TiVo customers. The applications and contents are expected to enhance TV viewership for TiVo customers.
TiVo has been focusing on partnerships and strategic alliances to drive subscriber growth. TiVo has a number of partnerships with major companies including Comcast Corp. (CMCSA), Charter Communications, RCN, and Suddenlink. TiVo also expanded its services globally through partnerships with ONO, Virgin Media Inc. (VMED) and Canal Digital (in Scandinavia).
We believe that TiVo will continue to pursue opportunities for developing strategic partnerships with cable operators both in the domestic as well as international markets in order to boost its subscriber base going forward. We believe that these partnerships will also help in reducing competition over the long term.
Although the legal settlements with EchoStar, AT&T, Microsoft (MSFT) and Verizon (VZ) did away with a major overhang on the stock, we believe that TiVo needs to focus on increasing its subscriber base by expanding its product portfolio going forward.
However, pending patent litigation issues, rising R&D costs, and higher hardware and sales & marketing costs are expected to impact TiVo’s profitability in the short term. Increasing competition from cable and satellite providers could also hurt profitability over the long term.
Currently, TiVo has a Zacks Rank #3 (Hold).
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