TiVo pays US$135 million for Digitalsmiths

Digitalsmiths’ Seamless Discovery service for personalised recommendations.

DVR maker TiVo has agreed to pay US$135 million (€99.3 million) for cloud-based content discovery service Digitalsmiths, in a move it said would accelerate its evolution to a device-agnostic, cloud-based service provider.

TiVo said that the deal will expand its role with tier-one US service providers, as Digitalsmiths has relationships with seven of the top 10 US pay-TV operators, reaching 64% of US pay TV households.

It also said that Digitalsmiths’ revenue growth trajectory will help to accelerate TiVo’s long-term adjusted EBITDA growth.

“The Digitalsmiths acquisition opens new opportunities to commercialise and deploy TiVo’s cloud based services and technologies to operators, in an extremely cost effective way that can be offered either independently or in conjunction with TiVo’s renowned user interface,” said TiVo president and CEO Tom Rogers.

“Additionally, Digitalsmiths contributes expertise, data opportunities, and approaches that complement and extend TiVo’s extensive work in advanced television to customers seeking search, recommendations, and portability.”

Digitalsmiths is a content discovery and recommendation service that offers personalised video search, recommendations, browsing, social trending, and mood-based discovery.

The service is designed to connect consumers to the most relevant movies, TV shows and live events at any time, on any screen, including set-top boxes, tablets, smart phones, computers and games consoles.

Overall, the firm claims to power 46 domestic and international customers, with partners including Zeebox, Foxtel, Sharp, Univision, and i.TV.

TiVo said Digitalsmiths’ current user base “represents about 10% of the total potential user base licensed under its current contracts” and expects it to grow to over 50% penetration in the next few years.

“We are confident joining forces with TiVo profoundly enhances our ability to seamlessly deliver industry leading video discovery solutions that drive superior customer satisfaction and better usage metrics for video services,” said Digitalsmiths co-founder, COO and CTO, Matt Berry.

Separately, TiVo said it has increased its stock repurchase authorisation by US$100 million and that it intends to repurchase US$100 million of shares in the first quarter of its fiscal year 2015.