Xperi, which completed its merger with TiVo about one year ago, recently notched new agreements with Google and Fox, marking growth for its IP licensing business in OTT.
Samir Armaly, president of IP at Xperi, said that over the past decades, Xperi and TiVo’s IP licensing business has been more focused on the traditional pay TV space—cable and satellite providers. But more recently Xperi has identified OTT as an area of growth for the company’s IP business.
The new IP licensing agreement with Google is important in the OTT space since it reaches across YouTube, Google TV, Chromecast, YouTube TV and Android TV. Google has been a TiVo/Xperi patent licensee for nearly a decade now and obviously both businesses have grown and changes in the past 10 years will likely grow and change even more over the next 10 years. Armaly said that means the negotiations focus on what exists today and where both companies see the future of the businesses going.
“It’s a nice broad agreement that covers all forms of video distribution and consumption that [Google] has on its platforms,” he said.
Not long after the Google IP deal renewal, Xperi signed another major IP agreement with Fox, which has undergone changes in the past few years after its asset deal with Disney and OTT launches and acquisitions like Fox Nation and Tubi.
Armaly said the primary difference between IP deals with platform providers like Google and content owners like Fox comes down to different licensing models. Historically, Xperi has used a monthly, per-subscriber licensing fee model with traditional pay TV operators and that works well since those distributors generate revenue from subscribers on a monthly basis. But that model doesn’t necessarily fit as well with AVOD streaming services like Tubi.
“Everybody’s got their own approach to the market and we have to pride ourselves on being consistent. We want to have a level playing field, we want people to feel like we’re treating everyone fairly but also we have to be able to adjust and customize because there are going to be differences between the platform companies and the content companies,” Armaly said.
Looking ahead, Xperi sees OTT having a significant impact on its IP licensing business. Armaly said that, historically, the Xperi/TiVo IP business has had about a $300 million annual run rate over the past decade. After the company’s licensing deal with Comcast last year—which ended a lengthy standoff—that run rate was increased to $350 million. But Armaly said that doesn’t include growth potential in OTT among renewals and new licensees along with unresolved issues with Canadian pay TV providers and Xperi’s semiconductor business.
“In the aggregate, we’ve told people that between growth in OTT, continued penetration in Canada and restarting that semiconductor licensing business, we think there’s growth opportunities in the low hundreds of millions of dollars per year above and beyond the $350 million baseline,” he said.