Interactive television software company OpenTV has reported annual revenues up 20%, reducing year on year losses, while admitting weaknesses in financial reporting, and moving to embrace new opportunities beyond set-top box middleware.

There are now over 50 million set-top boxes deployed around the world with OpenTV embedded software.

“Our solid fourth quarter and full-year results demonstrate the underlying strength and continued potential for our middleware business and other products,” said Jim Chiddix, chairman and chief executive of OpenTV.

During the year, the company re-organised its reporting into middleware, applications and betting. Middleware revenues were up 27%, applications fell 15%, but revenue from BettingCorp, acquired the previous year, rose 567% to $2 million, although this represents only a fraction of total income.

The majority of OpenTV revenue is derived from royalties from the sale of products such as set-top boxes, and this rose over 80% on the previous year.

For the year to the end of 2004, OpenTV revenue was $77.2 million, up 20% on the previous year, although the company still recorded a net loss of $22 million, down from $54 million.

OpenTV also disclosed that although it received an unqualified audit report from KPMG, a review found material weaknesses in its internal controls on financial reporting which it has begun to address.

With growing interest in IPTV, the delivery of video using internet protocols, the company is quick to point out that it believes it is well positioned to exploit this new opportunity as it unfolds, particularly in hybrid deployments, where operators may wish to integrate offerings available over broadband lines with those available by other delivery methods.

Meanwhile, as cable operators such as Comcast move to take greater control of their technology platforms, OpenTV is seeking to address new opportunities beyond middleware. The company appears to be emphasising the business of back office integration for support systems in areas such as targeted advertising and betting for all interactive networks, not just those with OpenTV middleware.

Chairman Jim Chiddix told analysts: “We will continue to build on our position as the world’s dominant middleware provider. We will aggressively seek new customers and continue to grow as our customers grow. We will sell additional products to customers as they expand their digital offerings. We expect to do that whether or not they use our middleware.”

He noted that there had been a lot of activity in the interactive landscape. OpenTV said that the announcement that Comcast and Cox were planning to buy competing software provider Liberate spoke of a heightened interest in interactive television. “We view that as a good thing,” said the OpenTV chairman. “We think that there are a variety of products that we’ll be able to sell those customers as they embrace interactivity.”

As a former cable executive, Jim Chiddix said he had heard no indication that Comcast or other operators are not fully in support of OCAP, the open standard middleware based on MHP. He said “OCAP we think will come in due course and we intend to have products that we sell in an OCAP world”. He concluded that “We would be happy to sell middleware to operators, but also happy to sell other products.”