Has TiVo's Fate Been Sealed?

ChipGuy writes "Things are getting bleak for TiVo, reports the New York Times, and adds that TiVo blew a major opportunity to team up with Comcast. And that might have cost CEO Michael Ramsey the job. Om Malik writes that 'The fate of TiVo also highlights the dilemma facing a lot of "exploding TV" start-ups. The technology does not necessarily translate into profits and a business,' and breaks down the financials -- over half a billion dollars in losses so far. PVRBlog adds that 'When the story of TiVo is written, this Comcast negotiation could be the point when the company's outcome was decided.' More reactions here."

Comments

Exploding TV?

[PopeAlien]

'The fate of TiVo also highlights the dilemma facing a lot of "exploding TV" start-ups.',

ok, I admit I'm not real familiar with the latest in television technology, but exploding TV's? what could possibly be the upside of that? faced with that sort of danger you'd definately want a TV-b-Gone. I'd say if their TV's are exploding TiVo's fate has definately been sealed.

Re:oh man

[GeorgeMcBay]

The product was good, service was good but the rest of the business world (mainly M$) did

As rich and powerful as Microsoft is, they just don't have the kind of power you think they do, especially when it comes to markets outside of computer OSes. I can't believe you're sitting here blaming Microsoft for the fact that Tivo is a poorly run company...

The vast majority of business failures people think were somehow caused by Microsoft were really caused by the ineptitude of the company that went under. When Microsoft goes after a market, a well-run company will push them back (see: Quicken vs Microsoft Money). A poorly run company? Well... Darwin's law kicks in. Is that really Microsoft's fault?

This is what I feared

[earthforce_1]

and why I would never buy any piece of hardware that relies on a subscription. All the more if they offer a "lifetime" subscription where you pay up front. People have fallen into this trap with health clubs as well - what is the chance that the company behind the hardware will outlive me?

TiVo has two things going for it

[mveloso]

TiVo really has only two things going for it:

* the program guide
* the interface

The program guide is really great, and the interface is incredibly easy to use.

The problem seems to be TiVo spends a lot of its money on the boxes. Hardware costs for the TiVo boxes totalled $68,056,000 for the last nine months of the last fiscal year. That's a lot of hardware.

They're also selling that hardware at a loss. HW Revenues were $60,823,000, with $29,508,000 in rebates. Ouch.

There's not a lot that TiVo can do, financially.

The TiVo service only cost $25,069,000 to run for those 9 months, while TiVo pulled in $81,311,000 in revenue. That means if they stopped selling TiVo boxes, they'd make money (though it's unclear from the revenue numbers if the tech revenues include partner hardware).

That won't expand their customer base, though.

Maybe they could spin off their guide business and license it to other box manufacturers? I'm sure TV Guide would love to buy it from them. It would free the guide to provide services to all the manufacturers, though they obviously have someone doing it already (who knows?).

Maybe they could contract to get the hardware built more cheaply?

The hardware is really killing them. Sure, they can't do a Microsoft (not at less than $1/subscriber/month for licensees). But they don't have to have high-end hardware either.

Success?

[fm6]

First, I have to take issue with the claim that such technology, concepts, and products are not enough for a successful business. I think their success to this point is evidence enough of the power of this kind of product.

"Their success to this point"???!!! For a private company, success means profits. If not actual profits, then hopes of profits in the forseeable future. As the story mentions, they've lost half a billion dollars, and show no sign of going into the black.

TiVo lovers (I used to be one myself) think this product is terminally cool because, when a TiVo box works correctly, it makes TV watching 100 times more enjoyable. But that, by itself, is not "success". Tivo lovers, though fanatical, are few and far between. TiVo has simply made too many mistakes. The platform is too klugy, so there's always been reliability issues. And if it does break, you have to send it back to the factory, for fees that approach the original purchase price. Even if nothing ever went wrong, most consumers just don't see such an expensive gadget as being worthwhile for what it does. This company is circling the drain.

Sorry to burst your bubble, but good "technology, concepts, and products" is not a guarantee of success. There are other factors: marketing, management, timing, access to markets, and just plain luck. The few techies that get rich making some amazing breakthrough get all the press -- but most innovative tech companies fail.

Which is true of all business. You can get very, very rich, but not without taking very, very big risks.

Most people miss the point of TiVo

[WalletBoy]

I think most people miss the point of TiVo especially when they say things like "I can just build a MythTV box or I can do this on a computer..."

What makesTiVo really great isn't the box, or the interface, or any of the generic PVR features, it's the TiVo service that makes it great and you lose that with everything else. It's the service that's worth it for me and what I don't mind paying for it. All these other PVRs are just hard-drive based VCRs with a GUI. Even a TiVo box is just a hard-drive VCR with a GUI without the TiVo service.

Sure you can get other PVR solutions to download TV-listings and they probably have something like TiVo's season pass where it can follow shows you have season passes to and tape them whenever they air (even if they are pre-empted). The one thing I don't know if anyone else has is the TiVo suggestions. I have my TiVo so well trained I don't have to use the TV listings anymore. My TiVo picks out most of what I watch for me. It's like hiring a personal secretary who knows your tastes.

After I come home for work and eat dinner, I usually have enough shows on my TiVo that TiVo picked for me to keep me entertained until I go to bed a couple of hours later. I don't have to surf channels, I don't even have to look at any listing to see if it's something I might like to watch and tell my PVR to tape it. It's gotten to the point where sometimes I don't even know what's on TV anymore and I don't care because I have more than enough shows I like to watch waiting for me each evening. I don't have to spend 20 minutes each day scrolling through a program listing of 500 channels to find the one program I might like to watch tomorrow and tell my PVR to tape it. For me I don't mind paying $12.95 a month if it means saving me 20 minutes a day in front of a computer or on a TV menu doing "prep-work" for my evening's TV watching. I will sorely miss this if TiVo were to go away.

Wins and Losses.

[bort27]

I've had my TiVo for over 4 years now. I love it to death. I think that TiVo did a hell of a lot of things right. Some quick examples:

1. Unlike, say, Microsoft, they never discouraged their users from hacking their boxes. As a result, a huge community of TiVo hackers emerged (see http://www.tivocommunity.com/). I upgraded my TiVo's 30 gig hard drive to two 120's, and installed a cachecard/network card combo from 9th Tee, which means I can do fun tricks like scheduling shows and season passes from the road, or watching shows in my bedroom on my XBOX.

2. Really great support. I've only had to call TiVo a couple of times, both for channel lineup issues, but they were always extremely friendly and helpful over the phone. For example, after I moved into my new house, I realized that Adelphia had just upgraded the cable in my area, and TiVo didn't have the lineup yet. So I called support, and the next day, TiVo called me back to tell me that my lineup was added. Simply awesome.

3. Choosing Linux. When I telnet into my TiVo, I get a bash shell. I've installed an ftp server, web server (TiVoWeb), and even installed cron. How cool is that? Plus, this excellent decision has led to new software being developed exclusively for the TiVo (such as a caller id display that uses the TiVo's built-in modem, so you can see who's calling without getting up off the couch). Simply brilliant.

4. The interface. They obviously put a ton of work into it, and it really shows. It just kicks so much ass.

Now obviously, they dropped the ball in a couple of areas. The Comcast merger was just a more recent one. I think these are the two biggies:

1. I think that their biggest problem has always been slow adoption; as long as I've had the thing, I've been seeing ads pop up on TiVo Central giving me hot deals on new TiVo units, which I'm supposed to share with my friends and family. Great, I can save Dad $50 on his new unit. But if they really expect me to convince Dad that he can't live without a season pass on those Seinfeld reruns he loves so much, then they should be giving me the 50 smackers. I'd probably have 10 people signed up under me right now if I got some sort of compensation for it. (By the way, click here to get a free Mini Mac!) :-)

2. Too expensive. The hardware and service together really do cost too much, unless you got in early like I did (back when lifetime service was $200). They should do what my damn cell phone company does: Knock the hardware down to like $99, and make me pay a very affordable $9.95 a month. If I try to cancel before 2 years are up, hit me with some obscene early termination fee. Yes, I hate it when cell phone companies do this, but that's how they stay in business. Besides, it's not like I'd be foolish enough to cancel my TiVo service anyway. TiVo is heroin. So far, I've paid $499 for TiVo and lifetime service, so TiVo won't make any more money off of me. If they were using my above plan, I would have paid in $589 so far, with more coming in every month.

I would really hate to see TiVo go. I hope they don't. But I suspect that even if the service dies, thanks to the openness of their hardware platform, someone (maybe me) will figure out how to write a script to pull show data off of Yahoo! TV or something. And with Microsoft and MythTV and several others entering the PVR market, there's no question that TiVo's invention is here to stay.

bort.