Xperi strategy for TiVo OS could woo OEMs from Roku

Executives at Xperi believe they have a novel concept to help them compete against the likes of Roku and Amazon with their TiVo-powered smart television operating system: Money and independence.

On Tuesday, officials outlined part of their business strategy for TiVo OS during a conference call with investors on the release of their quarterly and full-year earnings report.

Xperi brought in $135.5 million in revenue during its most-recent financial quarter that ended December 31, 2022, up from $124.8 million reported during the same quarter in 2021. Overall revenue for 2022 was reported at $502.3 million, which included a carve-out for the first nine months of the year when the company was part of Xperi Holdings (the intellectual property portion of the company was spun off into Adeia last October). Its GAAP operating loss was $299.1 million.

Xperi's Chief Financial Officer Robert Andersen attributed the 9% increase in Q4 revenue to the company's media and consumer electronics platforms, driven in part by the company's acquisition of smart TV software maker Vewd. At the time, Xperi said acquiring Vewd gave it a leg up by opening the door for the company to put its TiVo Plus ad-supported service on more than 15 million devices. It also was seen as one way to help the company further build out TiVo OS, which was shown off at the recent Consumer Electronics Show but isn't yet available on current television sets.

To that point, Xperi CEO Jon Kirchner affirmed on Tuesday that the first television sets powered by TiVo OS are set to debut later this year. Xperi already has a number of original equipment manufacturers (OEM) lined up to integrate TiVo OS into their smart television sets, including Vestel, JVC, Regal, Hitatchi, Daewoo and Telefunken; most, if not all, of the initial batch of television sets will be sold overseas.

When asked by an analyst if Xperi felt TiVo OS could be competitive with the likes of Roku and Amazon, Kirchner said the company felt it had a robust road plan for long-term success.

The CEO acknowledged there will be some similarities between what Xperi plans to do with TiVo OS and what Roku and others do with their software: The experience will be powered by a third-party operating system, Xperi will charge a licensing fee for TiVo OS, and the company plans to offer users free, ad-supported movies and TV shows through TiVo Plus and other ventures, which will generate ancillary revenue for Xperi.

But he said Xperi has some unique elements in its strategy with TiVo OS that separate itself from the competition. For one, TVs made by partner OEMs will still carry the branding of the manufacturer — they won't be sold as "TiVo TV," but will instead be marketed as "powered by TiVo OS."

Xperi also hopes to win over OEMs by cutting them in on the revenue that is generated from the free, ad-supported (FAST) streaming content found on TiVo OS products like TiVo Plus, as well as on third-party FAST channels that might be carried on TiVo OS. With every TiVo-powered set that is sold, OEMs stand to make more money.

Kirchner didn't say how much TiVo will share with OEMs, but he did say that the strategy behind TiVo OS is expected to help Xperi generates over $190 million in revenue within the next three years.

One thing that could help Xperi: Roku's recent announcement that the company would start making its own line of Roku-branded smart television sets. Last week, Roku executives said building and selling its own hardware would lead to better products and more innovation that would eventually trickle down to its own OEM partners — of which it counts TCL, Hisense, Element and Walmart's Onn — and wasn't necessarily intended to compete with them.

But Kirschner says the announcement is already convincing some OEMs to approach Xperi about TiVo OS.

"That announcement underscores the need for an independent media platform," he said. "We had quite robust engagements prior to that announcement, but I would say that announcement further created some interest as [OEMs] look to engage around independent platforms...our model [of] sharing revenue with TV partners long-term, as well as our best-in-class interface and search and recommendations, really help drive interest in what we're doing."