Rovi Expected to Supply IPG for Sony’s Google TV Product

Rovi is expected to supply an interactive program guide (IPG) for Sony’s Google TV products and will seek to license its search and recommendation technology to Google for deployment in the platform, CEO Fred Amoroso said in a conference call. Rovi has an existing licensing pact with Sony for TVs, and any use with Google TV will be an extension of that agreement, Amoroso said. Sony officials weren’t available for comment. Google’s Android operating system is expected to be “reasonably distributed” across a range of devices and chipsets, Amoroso said. Rovi already supplies Google with music and video data, built largely through the acquisitions of All Media Guide and Muze.

CE companies implementing Google TV are expected to use customized versions of Rovi’s TotalGuide IPG, company officials have said (CED June 8 p1). In June, Rovi officials told us they were still awaiting the Google TV application programming interface needed to develop for the platform and that it would take 90 days to port TotalGuide to Google TV.

Rovi is positioning its Web services platform as “a backbone that can enable search, browse, and discovery of entertainment content powered by our metadata and supported our ad infrastructure across a wide range of devices including Google TV,” Amoroso said. “While we view Google TV as an opportunity, we also have to be conscious of the fact that Google is a large player and if their direction was to be competitive with ours, it could pose risks. Regardless of the platform, we believe we are well-positioned to monetize the connected TV opportunity. At a minimum if a TV has guide on it, we expected to generated IP license fees."

The agreement with Google is part of larger effort by Rovi to spread its TotalGuide technology across CE products and cable set-top boxes. Rovi has TotalGuide licensing pacts with two CE manufacturers and the first Blu-ray players, TVs, network area storage devices based on the technology are expected ship by mid-2011. TotalGuide draws together IP and services Rovi acquired in buying Gemstar TV Guide International, All Media Guide, Muze and Mediabolic. Sales to CE manufacturers that choose the full TotalGuide package, are expected to generate revenue of $10 per device, company officials said. The revenue will be half that amount for suppliers deploying components of TotalGuide, company officials said. The average will be $7-$8 per device, company officials said. The TotalGuide IPG includes broadcast, broadband and personal guides.

A version of TotalGuide that delivers “more conventional data” is expected to be released for cable systems by mid-2011. Rovi has shown prototypes of an IPG with its Passport on the backend and a TotalGuide user interface. Rovi last year shifted some resources to developing a version of TotalGuide for cable operators. The revamped Passport allows for remote recording, video-on-demand search and switched digital video. Passport is being used to replace Cisco’s Sara IPG in Scientific-Atlanta boxes at two “top 5” cable operators and “several million” homes are expected to make the transition by year-end 2011, Chief Financial Officer James Budge said. Rovi boosted its forecast for annual revenue growth in cable and satellite services to a “mid-teens” percent from “low-teens” based on the addition of cable operator Unity Media in Germany and the shift to Passport guides from Sara.

Passport and TotalGuide also are key for Rovi increasing its annual ad revenue this year to $20 million from $9 million-$10 million in 2009, company officials said. Rovi had forecast ad revenue of $20 million-$30 million this year, up from $10 million-$15 million in 2009 (CED Feb 16 p3). Rovi’s IPG ad network is available in 30 million homes and 23 cable operators in 20 markets, company officials have said. TotalGuide is expected to increase that to 40 million homes in 2011, he said. The ad network also is available on non-Rovi IPGs, including one with Verizon FiOS that is used to deliver a Ford commercial, company officials said. The ads are coming from content suppliers and “several handfuls” of non-program providers, company officials said. The sharpened focus on advertising is expected to increase Rovi’s cost-per-thousand impressions.

Rovi swung to a $41.1 million Q2 profit from a $2.1 million loss a year ago when it took a $45.6 million restructuring charge as it sold off TV Guide Network, TV Guide Magazine and TV Guide Online. Rovi’s earnings benefited from a $124 million cash payment from the IRS for carry-back claims related to its $2.4 billion tax loss on the sale of TV Guide Magazine, the company said. It also received $36.8 million in funds escrowed as part of the TV Guide Network sale, it said. Rovi also sold off its stake in Norpak, which developed data encoding boards. Norpak generated $5 million in annual revenue for Rovi, Budge said.

Rovi’s revenue rose to $134.7 million from $119.4 million as that from CE manufacturers jumped to $57.7 million from $47.9 million. Service provider revenue increased to $63.8 million from $58.5 million. Other revenue, including data licensing and copy protection, increased to $13.1 million from $12.95 million. Rovi provides music and video data to Apple and Google, among others, and data licensing accounts for more than half of its “other” revenue, Budge said. Rovi’s analog copy protection revenue from movie studios declined. he said..