In re: Tivo — Why is it a failure?

Clearly, it isn’t a failure in terms of customer satisfaction, or even for product inventiveness. People love TiVos, the word has been taken on as a verb and used as a generic term for PVR (personal video recorder). Despite all of this Tivo has had only one profitable quarter in history (and not recently). Looking at their market share, they have a surprisingly small share, only 4 million of the 16 million PVRs, and to top it off only only a third of those four million are ‘real’ Tivos they make full money off of, the rest are DirecTV ones, which they recieved only a small amount for (DirecTV has since switched to a brand they own of PVR).

I looked into all this the other day because I noticed the price of TiVo and wondered how could they not be making money. Clearly they sell their hardware at a subsidized price, but they charge a pretty hefy monthly fee (so high I feel it deters many of us, I have opted for a computer software based PVR called SageTV, which incidently I think is amazing) Using SageTV I have the program guide for free, following the purchase of the software, so in only a few months its already cheaper then a Tivo. This was where my question in TiVo started, how much does it cost to provide TV listings? Well originally they had to support modem and dial up operations, which probably is more expensive then Sage’s internet listings, but even then, Tivo is expensive. They have a new model of subscription pricing starting now, where you have no hardware cost and instead pay a fee which gets as LOW as $16.95 if you make a 3 year commitment. Of course they aren’t going to compete with cable, if they offer a $6 a month version, or real cost sensitive customers like me go the SageTV route.

TiVo tries to distinguish itself from the bland PVR versions distributed by cable companies, but most people aren’t going to pay $100 more a year for the small differences. Either way many seem to think TiVos time is over (see article in Newsweek) and while in some ways it was the iPod of the new time shifting movement, unlike iPods it didn’t come to dominate its market. Of course they are trying to save the company by adding new features that distinguish it from others, but they’ll need to do a lot to cut into competiton.


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