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TiVo Inc. (TIVO - Analyst Report) recently announced that Midcontinent Communications has been deploying TiVo’s advanced TV offerings to the latter’s customers. Midcontinent Communications provides data, video, phone and cable advertising services to residential as well as business clients of Minn., Wis., N.D. and S.D.

Midcontinent customers of Rapid City and the Northern Black Hills of S.D. will be the first to enjoy the new offerings while the services will be available for the rest of the customers in the near term. The TV products and services available to Midcontinent customers include TiVo Premiere Q series DVR and two complementary offerings, TiVo Mini and TiVo Stream.

With these two new offerings, customers can watch their favorite shows on multiple televisions in the house (with the help of low-cost IP set top through TiVo Mini). Additionally, customers can stream recorded or live shows in their smartphones or tablets (through TiVo Stream) with only one TiVo Premiere Q series DVR being installed in the household.

TiVo has been focusing on partnerships and strategic alliances to drive subscriber growth. TiVo has a number of partnerships with major companies including Comcast Corp. (CMCSA - Analyst Report), Charter Communications, RCN, and Suddenlink. TiVo also expanded its services globally through partnerships with ONO, Virgin Media Inc. and Canal Digital (in Scandinavia).

We believe that TiVo will continue to pursue opportunities for developing strategic partnerships with cable operators both in the domestic as well as international markets in order to boost its subscriber base going forward. We believe that these partnerships will also help in countering competition over the long term.

Although the legal settlements with EchoStar, AT&T, Microsoft and Verizon (VZ - Analyst Report) did away with a major overhang on the stock, we believe that TiVo needs to focus on increasing its subscriber base by expanding its product portfolio going forward.

However, pending patent litigation issues, rising R&D costs, and higher hardware and sales & marketing costs are expected to affect TiVo’s profitability in the short term. Increasing competition from cable and satellite providers could also hurt profitability over the long term.

Currently, TiVo has a Zacks Rank #3 (Hold).

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