Restructured Xperi Targets Connected TVs And TV Makers Across The Globe

With Xperi’s patent holdings in semiconductors and entertainment now spun out into Adeia, the newly restructured Xperi Inc. has kept the parts that enable media and entertainment, and is focused on leveraging those technologies for opportunities in connected TVs.

Notable units include TV time-shifting pioneer Tivo, terrestrial radio standard HD Radio, and theater-inspired brands IMAX Enhanced and DTS. Xperi also has its own streaming service, TiVo+, with 160 FAST channels among much else, and its own streaming hardware, the TiVo Stream 4K.

“One of the things we've done....was to build two bigger businesses, one in products and services, one in (intellectual property) and patents, and then turn around and split them up so that they could more closely focus on one side or the other, because there's this dis-synergy between them,” said CEO Jon Kirchner. “So by separating, we simplify, we focus, we get rid of the dis-synergy. And it's easier for investors as well to both track and understand.”

Kirchner quickly rattles through some stats about the reshaped Xperi:

• 30 million households using devices with Tivo interfaces;

• 90 million cars with HD Radio;

• 100,000 movies and shows on Tivo+;

• 100 billion devices powered by Xperi technology;

With those 30 million customers on its Tivo/Tivo+/Tivo Stream 4k ecosystem, the company is already monetizing search and discovery. But going forward, Kirchner wants to build a bigger Connected TV footprint by also becoming the operating system for many smaller TV makers.

Xperi already provides technology to U.S. partners such as Vizio, but is looking outside North America for new opportunities, Kirchner said.

“When we look across the globe, there's a lot more volume to work with, a lot more people,” Kirchner said. “So if we can build the same monetization engine, use the data and analytics, and drive our monetization revenue ever higher, that's the upside really in doing this.”

Xperi bolstered its CTV credentials in July, spending $109 million to buy middleware company Vewd Software, whose team created the Opera web browser used in millions of TVs.

“We will begin monetizing that so that our business looks a lot more like Roku and will be one of the players in the broader TV OS space, really targeting Tier Two TV makers, who don't have the resources to build their own full-blown services and their own ad stack and all the rest,” Kirchner said.

The first such deal is with Turkey-based Vestel International, one of the world’s biggest TV makers, with more expected soon in developing markets, Kirchner said.

“We think the European ad market is a few years behind the U.S. and its development, but over time, it will certainly grow up to be pretty meaningful,” Kirchner said. “And I think that’s a market position where there's a lot of green field because none of the big guys really own it in a major way. That presents a big opportunity for us.”

Latin America and Asia also beckon, with their own manufacturers, markets, and platforms needing tools and tech.

It won’t be easy. Kirchner acknowledged the connected TV market is complex, with plenty of competition from major OEMs and big players such as Roku, Google TV/Android TV, Apple TV, and Amazon Fire TV.

They all offer operating systems designed to seamlessly and efficiently manage thousands of niche ad-supported networks, subscription VOD giants, an explosion in FAST networks, traditional and virtual Pay TV services, transactional VOD sales and rentals, music, games, and much else.

Throw in language, currency, regulatory, cultural and other challenges of International markets, and it’s a hard nut to crack.

“That’s one of the things that makes it hard to build a business of scale in this space,” Kirchner said.

But it’s definitely time to jump in. Kirchner cites company surveys showing 51% of TV viewing last quarter was of “non-linear content.” Despite that burgeoning viewership, CTV platforms attract just 22% of ad budgets. That almost certainly will change, which makes it vital that Xperi stake a claim in the space as quickly as possible.

“We believe you’re gonna see a massive amount, billions of dollars, of advertising shift out of linear TV over time as those viewing trends continue,” Kirchner said. Owning “footprint, ad inventory on these TVs, or apps, or you own the OS where you own all the ad inventory” is vital if you want to capture the shifting dollars.”

Longer term, the company is positioning itself for a very different distribution opportunity, in autonomous vehicles. Through its HD Radio brand, Xperi already has relationships across the auto industry. It will offer not just rolling infotainment centers but safety features like monitoring sleepy or impaired drivers (BMW is already a customer).

“We think video is going to find its way into the car very much like your living room,” Kirchner said. “And we have a major car franchise from an infotainment perspective with HD Radio and successor technology. So we'll see it there too.”

Xperi’s other long-term investment is in artificial intelligence computer chips, through a startup it launched and spun off over the past three years called Perceive.io, which is headed by Xperi’s former CTO.

Perceive’s goal: to compress data-center-level computing capability into tiny, low-power-consumption chips running smart sensors in just about any kind of device, Kirchner said. That puts more capability and autonomy within the device itself, rather than depending on network connectivity for smarts. First products are expected in 2023.