TiVo’s Competition ZillionTV Launches

This week, a new company was launched that CNBC introduced as TiVo on Steroids. I have written about ZillionTV a bit while it was still in stealth mode, but today, you can start reading my interview with Mitch Berman, ZillionTV’s CEO. ZillionTV just launched with major studio backing.

Meanwhile, on Monday this week, TiVo (NASDAQ:TIVO), the pioneer in digital video recorders (DVRs), reported mixed Q409 results. The company reported a loss that was less than expected due to its cost reduction efforts through cuts in jobs and marketing costs. In fact, TiVo recorded the first net income positive year in its history despite the economic downturn.

For the full year fiscal year 2009, net revenues were $249.67 million, down from $272.67 million. Net income was $104 million or $1.03 per share, compared to a net loss of $31.6 million or $0.32 per share last year. Adjusted EBITDA was $120 million, compared to a loss of $3 last year. Excluding the $105 million EchoStar damages award, adjusted EBITDA would have been $32 million.

In Q4, net loss was $3.6 million or $0.04 per share, compared to net loss of $6.4 million or $0.06 per share last year. Revenues declined 20% to $59.2 million with Service and Technology revenues declining 17% to $48.5 million. Last quarter TiVo expected a loss of $10 to $12 million on Service and Technology revenues of $47 to $49 million. Analysts expected a loss of $0.10 per share on revenues of $54.7 million.
Q4 adjusted EBITDA was $2.5 million compared with $0.9 million in Q408. With expenses declining 28%, gross margin increased to 49.8% from 44.4%. TiVo ended the quarter with $207 million in cash, cash equivalents and short-term investments, and no debt.

TiVo-owned subscription gross additions declined 46% from 109,000 last year to 59,000. At the end of the quarter, TiVo-owned subscriptions were 1.6 million and cumulative total subscriptions were 3.3 million. Subscription acquisition costs (SAC) declined 17% to $114 per subscriber. The monthly churn rate improved to 1.3 %. This perhaps is due to TiVo’s deals with Netflix to allow subscribers of access Netflix’s video library.

Continuing to incorporate the on-demand video trend into its strategy, TiVo announced on Monday its deal with SeaChange, a leading provider of cable video on-demand solutions to provide improved video on-demand availability. It also announced a deal with Alticast, a leading a leading provider of middleware software to add TiVo’s applications to set-top boxes. The deal should make it easier for consumer electronics companies to create advanced set-top boxes.

For the first quarter, TiVo expects Service and Technology revenues between $47 and $49 million, adjusted EBITDA in the range of breakeven to $2 million and net loss in the range of $6 to 8 million. Analysts estimated a loss of $0.01 per share on revenue of $48.7 million.

TiVo is currently trading around $7 with a market cap of around $743 million. It hit a 52-week low of $4.00 on November 21.

TiVo pioneered DVRs way back in 1997. Since then, television has been seeking to go interactive, but has mostly hiccuped. Meanwhile, online video on the computer has really taken off. ZillionTV seeks to change that. “We’re not about computer screens and geek users. We’re about TV. Real TV. Just TV. Viewed by normal people, not just geeks,” says Mitch Berman, ZillionTV’s CEO, a television industry veteran.

Well, Mitch, show us what you got!