Tivo

Strategic Inflection: TiVo in 2005

TiVo’s, despite facing challenges that included a minimized relationship with DirecTV which threatened its financial health, increased competition that not only filled holes within its own product line but stood to endanger realizing its long term vision of being the portal to entertainment services in the house. To solve for these obstacles, TiVo has identified four market opportunities from which to extract and potentially variegate.

TiVo’s three main market segmentations consist of advertisers and networks, OEMs and CE manufacturer licensees who require the TiVo technology to operate with their own products and lastly, end users who purchase TiVo boxes at retail for a one time purchase price and subsequent subscription fees.

I believe the issue is TiVo’s fundamentally flawed business model. It offers a fantastic, popular and differentiated product. However, they cannot manage to leverage a successful product while control the cost or margins to make them a financially impactful player in the market. With a subscriber-based, direct to consumer business model – not enough margins can be realized. As a result competitors are offering the same type of product, albeit with less bells a whistles at no cost. In addition, any subscription fees are buried into the MSO’s overall monthly bill. Therefore a subscription fee less impacts the consumer.

TiVo’s major differentiator and its biggest potential moneymaker is its ability to analyze viewing habits at a granular level. It should leverage this strength and transform it into a core competency. They may even consider a partnership with or an acquisition of a research firm. In order to realize the full potential of advertising and data mining service profits, more subscribers are necessary in order to dilute expenditures. To solve for this, TiVo should license their software to other DVR makers thereby increasing the pool of data it receives and sells to networks and...