Today TiVo remains valued at $1.5 billion despite having $600 million in the bank, another $200 plus million on the way from AT&T and a certainty of a win at Verizon for a similar amount. That means that the enterprise itself is being valued at just $500 million. We think that last week, when TiVo cut a deal with Microsoft, it will have involved either a flat license payment, or a per set top payment for all of its Mediaroom customers.
The patents that Microsoft used to fight TiVo were weak and unsustainable, and if Microsoft is a net payee on IPR assets to TiVo, then that treasure chest is likely to continue to inflate. And while the share price stays the same, it is making a profit for the first time in four years, but its enterprise value is effectively falling (as its cash mountain rises).
So the same thing will happen to everyone that has entered this cloud based OTT multiscreen software race, which happened to IPTV middleware – they will all be bought and sold and some will fall by the wayside. Cisco certainly needed a purchase, but it went out and bought the wrong company in NDS, it should have bought TiVo.
Every set top company is on the way to becoming a software house and cannot avoid the need to acquire this type of technology, and should stop building hardware. Motorola has all the wrong technologies, suitable only for classic multitasking IPTV, and yet it has no basis for buying a company. Google of course might approach one of these many OTT companies, but why own it AND Motorola Home, that’s not a good plan.