TIVO 2005 CASE ANALYSIS
I. Company Background * TiVo, a United States corporation based in Alviso, California was formed in 1997 by Ramsay and Jim Barton and became a leading provider in the digital video recorder (DVR) market in the early 2000s. * Through a system that is integrated with the set-top boxes of satellite and cable providers, TiVo devices can digitize and compress videos from any source and therefore enables subscribers to record programs without video tapes or DVDs, allowing them to watch the programs at their own preference. * TiVo’s mission is to “to revolutionize the way consumers watch and access home entertainment by making TiVo the focal point of the digital living room, a center for sharing and experiencing television, music, photos and other content. TiVo connects consumers to the digital entertainment they want, where and when they want it” (TiVo Investor Relation).
II. Utility Map of TiVo’s DVR

| Purchase | Delivery | Use | Supplements | Maintenance | Disposal | Customer productivity | Free trial | | Two weeks of EPG information, TiVo’s “showcase” service, TiVo’s Series2 | Season Pass, Wishlist, HME | | | Simplicity | | | Simple clicking | | | | Convenience | | | User-friendly interface, HMO, TiVo to Go | Conflict resolution system | | | Risk | | | Difficult installing, help needed from customer service, brand education | | | | Fun and Image | | | | | | | Environmental Friendliness | | | | | | | * TiVo is a smart video recorder that helps its owner watch and record movies in the way they prefer. The device has a lot of good features contributing to consumers’ productivity. For example, the user can fast-forward through the commercials, hit instant replay during sporting events. This also means TV advertisers have some clues about consumers’ behaviors, trends and preferences. * TiVo is also a simple device that consists of a basic PowerPC with an MPEG encoder / decoder and a universal Remote Control. Users have access to two weeks of EPG information and record the show they like by simply clicking on the program. Season Pass and Wishlist are two features that add to TiVo’s value. Its user-friendly interface and rich feature set receive a lot of high marks from customers. * TiVo also tries to create a platform that the third parties can add value. They differentiate themselves by continuously introducing new features/platforms that increase customers’ productivity. HME, HMO, TiVo to Go are some of such features. TiVo’s showcases are long-form but entertaining commercials and proved to be efficient for both viewers and advertisers.
III. TiVo’s Business Model * TiVo aimed at the convergence industry, where its technology was supported by content and other providers as well as the distributors who would pay it co-development fees. The company revenue was generated through the subscription, advertising, licensing, and services. However, most of the company income heavily relied on subscribers. * Since the company was established, TiVo’s managers had been done a good job in selecting their strategic alliances. The partnership with DirecTV which was formed in 2001 really helped to boost up the company subscription rate. * However, there are several risks associated with this business model. The over reliance on subscription revenue and strategic partners were proved to be risky and also made TiVo’s pricing strategy inflexible. Users hesitate to pay both a cable subscription fee as well as TiVo service fee. * The rapid evolution of the industry led to the influx of TiVo’s competitors, which consequently caused a decline in TiVo subscriptions and market share. As the market became more mature, it was difficult for the company to maintain their premium position. * In addition, some key TiVo partners were also holding equity stakes in rival companies, or developing in-house technology, which posed additional threat to TiVo’s position. For example, DirecTV merged with Echostar Communications and planned to shift away from the company to an in-house DVR. As TiVo was heavily dependent on DirecTV for distribution - almost 70% of its new subscribers come through them, the partnership had adverse consequence on the survival of the company. * TiVo’s notable competitors in US market were EchoStar NDS, ReplayTV, 2Wire, Akimbo, etc. As the industry was fragmented, TiVo received much competition from the companies with different services but offered similar products to end-consumers. Being as the first-mover in a litigious industry, TiVo has been struggling to protect their patents and other intellectual property. But, all of such legal issues were costly and time-consuming.

IV. Porter Five Forces’ Analysis Types of Force | Level of Threat | Notes | Threat of Entrants | Medium | * Low capital requirement for software but high for hardware * Customer’s loyalty established to some extent * Cost disadvantage independent of scale | Buyers | High | * Customer’s price sensitivity * No substantial product differentiation perceived * Substitute are available | Suppliers | High | * Threat of forward integration * Concentrated content providers and few component suppliers | Substitutes | High | * Diverse competitors * The market becoming very fragmented: VCR, VOD, PCs… | Rivalry | High | * Saturated market, increasing competition * High exit barriers |
V. SWOT Analysis Strengths * Partnerships with large players such as DirecTV, Comcast, Disney… * Customer’s loyalty * Nationally available through different large distributers/ retailers * Legal protection * First-Mover | Weaknesses * A lack of category and brand awareness * Functions were difficult and confusing to explain to customers. * High dependency on few suppliers * Expensive product with additional service fee for recording * Limited marketing campaign * Difficult installation | Opportunities * International market expansion * High customer growth rate * Advertising * Increasing on software development | Threats * Cost and time issues for defending against patent lawsuit * Too much reliance on partnership * Technology is easy to replicate |

V. Pros and Cons of Future Options Options | Pros | Cons | Pursuing stand-alone business | * Positioning the company in favorable place targeting potential markets * Highly profitable * Less reliance on partnership * Ability to build branded products | * Requiring high capital * Problems of subscriber acquisition cost * Direct competition with big players * Pricing and retailing issues to compete | Focusing on OEM deals with other cable companies & improving advertising platform business | * Access to high volume distribution channel * Low SAC * Opportunity to become advertising platform * Increasing advertising revenue | * Threat from partners’ different course of strategies * Reliance on partnership distribution | Becoming a content distributor | * Increasing brand recognition * Reducing cost and reliance on content providers | * Hard to achieve partnership * Conflict raised from the company long-term goal * Unpopular with consumers * Not highly profitable | Seeking new markets outside US | * Vast market and various opportunities * Ability to build strategic alliance or acquire international brands | * Stretching resources issues * Capital requirements |

VI. Concluding Recommendation * Since the market becomes saturated and networked, TiVo business model is not as effective as it used to be. The company should search for alternatives to exit from manufacturing of DVR set-top boxes or create license agreements with set-top box manufacturers. Penetration in online-services should be taken into consideration since it is the common trend among consumers today. As there are strong network among players, providers and distributors within the industry, TiVo should also consider building their branded value chains, reducing partnership reliance. * Another solution is that the company should focus more on software development. As their target is mass market, TiVo should differentiate itself by creating alternatives of services that can be easy, convenient and reasonable-priced to end-users.

WORKS CITED

"TiVo Inc." TiVo Inc. investor relations. TiVo, n.d. Web. 10 Nov 2011. <http://investor.tivo.com/phoenix.zhtml?c=106292&p=irol-irHome>

Case TiVo 2005