Rovi Moving IPG to Cloud-Based Business to Meet Customer Demands

Rovi’s customers are pushing for media cloud-based interactive program guides (IPG) as demand for embedded versions declines, Chief Financial Office James Budge said Wednesday at the Wedbush Technology, Media & Telecommunications conference in New York.

Samsung deployed parts of Rovi’s TotalGuide IPG in TVs last fall and is expected to expand its use of the cloud-based service this year to include the company’s advertising platform, Rovi officials have said. Rovi developed TotalGuide as an embedded IPG, but switched direction as customers in 2010 clamored for a cloud-based service they could use in an IPG of their own design, Budge said. The change could pay off for Rovi as it moves toward becoming a software services-based business, company officials have said.

Rovi unveiled a cloud-based services developer program at CES in January as part of an effort to extend the reach of TotalGuide IPG, concentrating first on video and music metadata applications that draw from the company’s acquisitions of All Media Guide and Muze. The cloud-based strategy gives Rovi customers access to metadata that provides detailed information on movies and music without the need to embed its products.

"It’s the exact same solution through the cloud instead of being embedded, and our biggest customers want to move in that direction,” Budge said.

MSOs are expected to get TotalGuide in “a few months” and start deploying it in trials by year-end, and an offshoot will emerge in the spring in TotalGuide xD. TotalGuide xD is a customizable media guide that lets MSOs extend content viewing, search and discovery across tablets and smartphones. The product will first be available as an iPad application with Armstrong Cable expected to test TotalGuide xD with its 245,000 video customers in five states, including Pennsylvania. The xD platform will be aimed at Rovi’s I-Guide and Passport IPG customers, including customers targeted for TotalGuide xD such as Time Warner Cable in Los Angeles and Dallas and Charter Communications. MSOs are expected to pay Rovi an annual licensing fee of 50-60 cents a subscriber, Budge said.

Rovi also is working to convert to TotalGuide MSOs with Scientific-Atlanta set-top boxes and Sara IPGs. About 2 million to 3 million of the 8 million Sara-based IPGs have been converted to new software, Budge said. Cablevision, with 3 million customers, is expected to switch 1 million to 1.5 million of them to the new IPG this year and the rest in 2012, Budge said. Cablevision paid Gemstar, which Rovi acquired several years ago, an upfront fee, but the new deal calls for Rovi to get an annual license fee of $3 a box, Budge said.

Having completed its acquisition of Sonic Solutions, Rovi is seeking to expand use of the DivX codec and RoxioNow video streaming platform at the heart of Best Buy’s CinemaNow and other services. The RoxioNow and DivX technologies were the main attractions for Rovi to buy Sonic Solutions, with the company’s other businesses, including video editing and DVD and Blu-ray software, professional DVD and Blu-ray authoring tools and Qflix all “a distant second,” Budge said.

There will be “a lot of life” in DivX for two to three years “as new standards are formed,” Budge said. “We're going to put enough weight behind it to make it successful.” With RoxioNow, “there is a lot of content” including 23,000 movies and 7,000 TV programs and Rovi will invest in the business including continuing an engineering team dedicated to it, Budge said.

Rovi also moved Sonic to a more “functional” structure by eliminating overlaps that included three business divisions working on digital watermarking, Budge said. “Folks know what their jobs are now,” and Rovi is moving forward with a “single face” for customers as it brings Sonic technology into the fold, he said.

The emergence of new platforms and the acquisition of Sonic will help Rovi increase advertising revenue to $35 million to $40 million this year from $15 million to $20 million in 2010, Budge said. Rovi landed 10 ad campaigns the first six weeks of this year, compared with four all of last year, he said. In 2010, each campaign produced $300,000-$500,00 in revenue for the company, Budge said. Rovi was paid 80 cents per 1,000 impressions on average for its ads in 2010, and the figure will rise to more than $1 this year, Budge said.

Rovi also recently acquired the start-up SideReel, which provides personalized guides to online TV content. SideReel’s data will complement its new AllRovi film and music search recommendation service that was created from AllMovie and AllMusic. The purchase terms weren’t disclosed.