Shares of TiVo Corporation (NASDAQ:TIVO) soared after-hours yesterday, rising from $20.75 at the market close to $22.75 by the end of the extended trading session – a 9.64 percent increase. The digital video service provider announced after the final bell that it just signed a licensing deal with internet entertainment giant Netflix Inc (NASDAQ:NFLX) – with TiVo agreeing to better integrate the online video service into its products.
TiVo will fully integrate Netflix’s video service, which is already available to TiVo subscribers, into its set-top boxes. Users will be able to freely search through the company’s streaming catalog, and there will even be a Netflix button on the remote control. The company’s set-top boxes can be purchased in a small, but expanding number of pay-TV providers and retail locations.
“The partnership between Netflix and TiVo dates back to our early days of streaming video,” said Bill Holmes, global head of business development at Netflix. “Building on this history, the agreements provide consumers freedom to watch their favorite TV shows and movies whenever and wherever, with an integrated experience across more devices.”
The companies, apart from beginning a new product partnership, also told investors yesterday that they inked a separate intellectual property deal. Under the terms of the agreement, Netflix now has access to TiVo’s patent portfolio. Netflix will also get a license to the Intellectual Ventures patent portfolio for over-the-top (OTT) video – an entertainment term used for the delivery of film and television content through the internet, allowing people to bypass traditional cable or satellite pay-TV services.
“Our agreements with Netflix represent a major milestone for TiVo as we expand our offerings for the fast-growing OTT space, and further demonstrates our commitment to delivering innovative technologies to new and emerging markets,” said Tom Carson, CEO, TiVo. “From products to patented technologies, TiVo is helping companies quickly adapt to a rapidly changing media industry and create beautiful user experiences that keep consumers connected to their favorite entertainment.”
TiVo informed shareholders yesterday that the new deals with Netflix do not alter its full-year 2016 financial guidance, which the company announced with its third-quarter earnings release earlier this month. The company generated $153.1 million during the three-month period, which ended September 30, 2016 – up 33 percent from the same quarter in 2015.
The third quarter was “transformative” for TiVo, especially considering the fact that the company was called Rovi during the second quarter. Mass media company Rovi purchased TiVo back in May for $1.1 billion in cash and stocks, and officially changed its name – and ticker symbol – to TiVo in September. The newly formed amalgamation of TiVo and Rovi said that the merger would generate at least $100 million in yearly cost synergies, with just 65 percent noticeable in the first year.
The author does not have any positions in the above mentioned companies.