TiVo Announces New Operating Plan to Support Strong Subscriber Growth
SAN JOSE, CA — April 5, 2001 – TiVo Inc., (Nasdaq: TIVO)
the creator of and leader in personal television, today
announced a new operating plan that eliminates the need for
additional funding during TiVo’s current fiscal year, ending
January 31, 2002. The plan supports the Company’s key
objectives of building its subscriber base and increasing
revenue, while reducing its operating expenses by nearly
35%. The announcement coincides with strong subscriber
growth and momentum for the TiVo Service. In the first two
months of Q1 alone, TiVo subscriber additions have already
met consensus analyst estimates for the full quarter. Based
on this, the Company expects to exceed consensus analyst
subscriber estimates for Q1.
“In today’s capital markets, companies like TiVo need to
take the initiative to manage their business without the need
for external funding,” said Mike Ramsay, President and CEO
of TiVo Inc. “We are implementing cost reductions and
increasing revenues. This gives TiVo the staying power to
capitalize on its leadership position in Personal TV and to
execute on our service strategy in this exciting new
category.”
TiVo’s cost reductions will be achieved through the
execution of several key initiatives. These initiatives will
decrease TiVo’s cash burn-rate by approximately $60 million
for the current fiscal year ending January 31, 2002,
eliminating the need for additional funding:
Leveraged marketing. TiVo is working with its
partners to maximize marketing effectiveness at
much lower costs. Partners such as AOL and
DIRECTV are contributing significantly to overall
marketing of the TiVo service. The plan will support
the addition of approximately 200,000 new
subscribers in this fiscal year, consistent with analyst
expectations. In addition to an aggressive marketing
focus, TiVo’s national distribution channel remains a
key asset for the Company, with over 4,500 retail
outlets selling TiVo.
New, low cost platform, delivered this year. Later
this year, TiVo plans to introduce an advanced
platform design, which can dramatically decrease
product cost and required subsidy levels.
Reduced infrastructure costs. TiVo will reduce
spending in non-critical Information Technology
infrastructure, decreasing spending in this area by
nearly 50% this year.
Reduction in Service Operations costs. TiVo has
dramatically reduced the customer service support
costs per subscriber for the DIRECTV receiver with
TiVo, below projected levels. As the DIRECTV/TiVo
product grows as a percentage of overall TiVo
activations, the Company expects these reductions
to significantly decrease overall customer service
operation costs.
Headcount reductions. As part of the above
initiatives, TiVo will reduce its headcount by
approximately 20%.
In addition to the cost reductions, the Company is affirming
existing revenue guidance for the year, driven by these
factors:
Subscriber revenues. TiVo recently implemented a
price increase for product lifetime service from $199
to $249. Customers who choose the product lifetime
service option will generate additional cash up-front
and higher ongoing revenue. This change may
increase the proportion of monthly subscribers in
TiVo’s customer mix, which would generate higher
recurring monthly revenue for the Company.
Non-subscriber revenues.TiVo’s non-subscription
business growth remains strong. The focus this year
is on leveraging products such as Ipreviewtm, Network
Showcasestm, TiVolution Magazinetm and TiVo
Directtm to sell to a broader advertising and network
base.
Industry partners applaud TiVo’s new operating plan. Larry
Chapman, President of DIRECTV Global Digital Media, Inc.,
said, “TiVo is the clear leader today in the area of Personal
TV. We are pleased that TiVo has taken these steps to
strengthen its position for the long-run and are encouraged
by the continued growth momentum in this category,
particularly with DIRECTV customers who are passionate
about the value TiVo brings to their TV viewing.”