TiVo 2007: DVRs and Beyond TiVo released its HD DVR in August 2007 to help get the company back on track through recapturing the market shares over the generic DVR competitors. Tom Rogers had experience in this field through his chairman duties as well as being CEO of Primedia and president of NBC cable. The new HD DVR was launched in November as Rogers created a strategy to guide TiVo to being a legacy DVR maker. Did the company make rational investing decisions while working in these business areas while the DVR system has placed TiVo on the map, has the company overall been a success? In the beginning TiVo lacked the desire for improvement even though the company had accumulated approximately $500 million in losses. After hitting a 3-year low the company was hit with many crippling news and decisions.
Leading up to the release of the DVR system, TiVo’s market share was worth much less than its actual value, however Rogers was not concerned as the HD DVR would place more power in the consumers hands through the ability to access video content via broadband internet. Through the DVR, TiVo will act as the facilitator to its third-party content distributors. As TiVo worked to develop various broadband content services for its consumers through its media industry partners it created a major offering, which was TiVoCast a system that enables users to access video content feeds though the main TiVo menu. As many questioned TiVo’s push for broadband distribution, nearly 50% of television viewing time was done through watching recorded programming from a DVR type system.
A time of expansion for TiVo took place when mass distribution arrangements were made for a pay-TV operator to distribute TiVo devices to its customers while bundling the services to incorporate the TiVo service in the subscription. In May 2007, Australia’s Seven Media Group began the use of their digital terrestrial platform which would gave the TV households of Australia the ability to have the TiVo service prior to the first half of 20008. The agreement Seven created included an advertising share component as well. When fall of 2007 arrived, TiVo knew it was make-or-break time with the new TiVo HD model, the holiday season, and stand-alone DVR sales. Creating a profitable stand-alone business made a challenge for the TiVo Corporation. The company could stop investing in any research and development as well as marketing efforts in order to aim TiVo at a high-volume CE product position. TiVo has worked to promote Rogers’ mission the company should be a search and advertising platform for home entertainment media depending on the broad adoption of TiVo services the customers are involved with. With TiVo only receiving a dime instead of a dollar or more when a customer signs up with TiVo on Comcast.
Overall was the company prepared with the correct vision in mind for TiVo and its broader industry? TiVo’s management team had ultimately four different directions it could take the company. The first was making TiVo a stand-alone business in this case TiVo would have to successfully compete with others in this type of business, earning high profits due to its unique offering. With a stand-alone business TiVo would have great flexibility in further product technology and development, along with enhancing its brand awareness enabling the company to be able to set higher prices. To make this possible TiVo would have to take on major marketing expenses that would need to be covered by the product sales revenue. Cable companies have the ability to outsource the manufacturing of DVR products and distribute them to their subscribers.
By working with Comcast TiVo may have to assemble its product equipment with another consumer electronics product and use co-branding decreasing TiVo’s brand awareness. It is important that the management board work on making advertising-related business into one of its core businesses. With the low churn rate, TiVo has created more competitiveness within the cable industry while lowering TiVo’s expenses. Being paired with a cable company, TiVo may have the cable companies take care of the marketing activities as well as the whole installation process creating a more predictable customer base. This push helps fulfill Roger’s vision of TiVo being in the mass market along with diversifying the company’s customer base and revenue source. TiVo provides convenience to its consumers without any boundaries with broadcasting content over the internet; the company can broadcast the content worldwide. Content creators want TiVo to help distribute their information to consumers which may require vast resources in creating a distribution network since there could be various hardware and software applications being used by consumers. Since TiVo has not ever been a content distributor, this type of business might be more risky than necessary in search of success, resulting in a partnership between TiVo and cable providers having the potential to become vulnerable. International business would not be easy for TiVo as the company lacks multi- national expertise along with the many risks the company would be exposed to including cultural differences that have the potential to adversely affect the company. However, TiVo has the ability to attract local cable networks, local content distributors, or local advertisers to become joint venture partners within local markets. With TiVo partaking in the leadership of DVR development, the company may increase its potential to sign more license agreements with other consumer electronic producers that will help increase the availability of product distribution networks internationally.
With the various products and services TiVo offers, the company offers different types of products and services to different groups of consumers. The market can be broken down into three different segments that TiVo successfully markets to including the advertisers and networks, a group of OEMs and CE manufacturer licensees, and the end users. The advertisers are given the opportunity to design 4-6 minute commercials in lieu of entertaining the end users. The OEMs and CE manufacturer licensees need the TiVo technology to operate its own products. The end users are offered DVR products that allow them to experience a new way of watching television that enables the users to pause live television, fast-forward through commercials, and hit instant replay during their favorite sport event.
As the growth of subscribers should continue for the next few years, the concept of internet TV has great affects on the company. The direct subscribers should increase as more and more consumers have access to a broadband internet connection. Between the two options to have TiVo through DirecTV and direct ownership, there have been more directly owned contracts initialized within the past few years. The service revenues will increase more in dollar terms per each additional contract. Each year TiVo spends approximately $40.30 on each customer while the direct owned TiVo subscribers result in $105 per year and $18.24 for DirecTV customers. With these numbers in mind, you might ask why TiVo continues to offer their services at a negative cost to DirecTV customers, if TiVo cancelled all of these subscriptions this would hurt their reputation and ruin the hopes of continuing to grow through new private revenues from their InterneTV service.
TiVo along with every other company have had their struggles from time to time most often TiVo is weaker in that the company charges to setup the DVR system, low annual profits, market share, stock price, along with HD and the multi-tuner options not being available at stand-alone retailers. The company also has its struggles with keeping up with the ever changing technology, advertising, and broadband TV convergence.
Throughout TiVo’s years of existence the company has had quality of its user interface, an ease of use that brings customers back, novel features, broadband content is available via TiVo, along with having excellent customer loyalty and satisfaction. TiVo has also been responsible for multiple search features, wish list tool, a la carte on demand TV strategy, and time shifting. While also creating partnerships with Comcast, Amazon, DirecTV, and other major companies. TiVo had established some international business opportunities, mass distribution, and working its way to becoming the industry leader, however the company tried to become a major competitor in each major trend leaving the company spread thin over several areas of the television industry. Even with TiVo securing multiple patents on its technologies, other companies have begun manufacturing and distributing other DVR systems threatening TiVo’s distribution. With the current ad platform, TiVo has multiple facets that enables it to appeal to different types of advertisers while the strong ARM program has already started as well. As many of the firm’s consumers are satisfied with their products, one of the company’s greater strengths is its ability to keep their customer happy, helping the company have repeat subscribers and new subscribers by word of mouth.
Everything done on earth is created in God’s image, however no one is perfect, making it necessary to continue to work towards getting to a better place. For TiVo this involves focusing on one or more of the different opportunities rather than going after all of them. When working on new products through research and development the company should focus on one item, and its opportunity, sales, potential, etc. If the company does not choose to invest in themselves via time in the appropriate areas, the company becomes a threat to themselves.

References
Yoffie, D. & Slind, M. (20 December 2007). TiVo 2007: DVRs and Beyond. Harvard Business School Publishing: Boston, MA.