You might not know Rovi, but the company is apparently quite big as it is acquiring TiVo for $1.1 billion in a cash-and-stock deal. Rovi holds a bunch of patents related to the entertainment industry and does a lot of software licensing to set-top box makers and TV service providers. It also manages metadata for TV content and sells this data to cable companies.
TiVo has been a pioneer in the DVR space. Many people gave up on their good old VHS recorders to switch to a TiVo. And, of course, TiVo also holds a lot of patents.
And yet, as TV content is switching to over-the-top streaming, people don’t need a DVR as much as before. Smart TVs and tiny Internet-enabled devices, such as the Apple TV, Android TV devices, Roku devices as well as Amazon’s Fire TV products have been eating TiVo’s lunch.
In September, TiVo unveiled a brand new and weirdly shaped DVR called the Bolt. It combines good old DVR features with apps to stream Netflix or Hulu content and a service to access your recorded content on your other devices. But cable companies have commoditized this kind of devices, making TiVo much less popular today than it was around 10 years ago.
So it looks like Rovi really wanted those patents. Rovi will pay $2.75 per share in cash, which represents around $277 million. The rest will be paid in stock. Right now, Rovi holds 5,000 patents and has been in the news more recently for suing Comcast over patent infringement.
With this kind of patent troll strategy, Rovi has been able to create a healthy IP licensing revenue stream. The company has licensed its patents to eight of the top 10 TV service providers in the U.S., such as Time Warner Cable and AT&T.
The new company will be called TiVo as end consumers are more familiar with the TiVo brand than Rovi. Rovi CEO Tom Carson will remain… CEO. Also, you can expect a bunch of layoffs as Rovi expects to save $100 million in “cost synergies” per year.