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Summary:

TiVo is hurting. That’s the gist of a story today from Multichannel News about the fate of TiVo, which lost 314,000 subscribers last quarter. All in all, the DVR maker is now down to 2.7 million subscribers. That’s 62 percent less than during its heyday in […]

TiVo is hurting. That’s the gist of a story today from Multichannel News about the fate of TiVo, which lost 314,000 subscribers last quarter. All in all, the DVR maker is now down to 2.7 million subscribers. That’s 62 percent less than during its heyday in 2006.

TiVo’s recipe for recovery includes building alliances with cable and satellite providers — the very companies that commoditized DVRs by replacing TiVo’s expensive hardware with cheap, generic recorders. The company now hopes to gain ground by recasting itself as a type of Google for traditional TV programming and online video. The question is: Will cable companies and consumers bite?

Let me start off with a quick anecdote. I moved from Los Angeles to the San Francisco Bay Area this summer, and somewhere during that move, my TiVo remote got lost. Now, if you don’t own a TiVo, you may not know this, but you can’t do anything with it without a remote. I’m a lifetime  subscriber, so not using my TiVo didn’t cost me anything. Still, initially I was pretty irritated. But then I started to rely 100 percent on Hulu for my shows, and it has since replaced my DVR.

I guess this isn’t really representative of how people are watching TV, especially given the fact that bringing Hulu to the big screen still remains a hurdle. Still, I had to think about my lost remote when I read today’s Multichannel News story. Writer Todd Spangler is chronicling how TiVo has been courting cable companies like RCN and the UK’s Virgin Media by telling them it can offer more than just a DVR. TiVo wants to be a Google for video, offering the ability ”to search and discover video content across TV, VOD and the Internet.”

Apparently that pitch helped seal the deal with Virgin and RCN, but you gotta wonder if that’s enough to save TiVo. Manufacturers of cheaper cable and satellite DVRs have already begun to embrace Internet video as well. Makers of Internet-connected TVs and devices like the upcoming Boxee box, on the other hand, are betting on the fact that you don’t need DVR functionality to watch online video, and consumers are certainly not shy about using the Net as a sort of TiVo in the cloud, clocking hundreds of millions of views each month on Hulu.com alone.

Still, TiVo hasn’t completely given up on the consumer market. The company struck an alliance with Best Buy earlier this year which will bring us devices “that will be integrated with Best Buy’s digital content offerings,” Multichannel News reminds us. In other words: We’re gonna have a Best Buy-branded TiVo with music from Napster and movie downloads from CinemaNow. But is that really enough to convince anyone to spend not only money on the device, but also $12.95 per month of service, especially since all of the premium online content comes with additional costs?

What is your take? Are you looking forward to TiVo expanding its online reach? Are you happy with your cable DVR? Or are you, like me, replacing DVR time-shifting with online on-demand programming? Let us know in the comments.

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  1. TiVo’s problem years ago was that it was in the hardware game. It could only scale so far. It quickly learned the game with sat and cable and soon Direct TV was driving most of its sub growth. But revenue per sub (or we could say ARPU) was sharply lower. It’s IP was its UI and remains so. So TiVo should focus on being the UI for the TV cloud.

    How fast we shift as consumers from DVR-based services to cloud-based ones depends on a whole lot of factors. Hulu’s not on the big screen, Boxee’s still not an optimal and simple cross platform UI (PC, Mac, TV. etc.), and connected TVs do not have a big installed base.

    I imagine when we get massive brand consolidation, a Disney/Comcast/NBCU/Sprint/TiVo combo could offer cloud-based services w/o DVR, a great UCG and fast streaming times all for a slight monthly increase over your existing bill. And then raise 20% every year or two!

  2. Lawsuits and the deal with DirecTV are all TiVo needs to prosper. In fact, the lawsuits and licensing alone would be sufficient.

  3. Great piece Janko!

    As a former longtime TiVo user, I’ve succumbed to using a combination of the “good enough” cable DVR, YouTube, individual show websites, and Hulu. Sure TiVo’s user experience and remote is superior but not enough to upgrade.

    One might assume TiVo’s shrinking relevance would make it a prime acquisition target (for an MSO or CE company), but what would you really be getting? An eroding subscriber base? IP?

    P.S. I don’t believe Hulu has a lock on over-the-top services given the confusing availability and windowing of content. This is their Achilles heel and ultimately why Google is actually best positioned (via YouTube’s licensed and unlicensed content and via search in general).

  4. For me TiVo still offers value in ease of use, particularly in the areas of sports, wishlists and suggestions. I don’t think the conversion from analog SD to digital HD can be separated from TiVo’s declining subscriber base. The early problems with cable cards, continuing SDV issues and cable company games with classifying subscription packages as PPV all put TiVo subscribers in an bad spot with their program providers. The cable cos in gain by TiVos loss in more customers who choose cable PPV over Amazon, Netflix or Blockbuster via TiVo.

  5. The article, and comments, are great. There is a weightiness to too-perfect solutions that tends to drag them down over time. The need for a service or product to exceed itself in its next iteration stagnates its growth potential. A little imperfection, and other chaotic factors, allow for more supple, responsive product evolution, relative to real needs, and lively markets. While it’s harder to manage somewhat-imperfect products’ maintenance and reputations, the potential for such products’ expansion into new or changing niches outweighs the extra management effort, over the long term.

  6. TiVo is cheaper than the cable companies DVR and has a much better interface. Buy a TiVO and a lifetime account and you break even in two years. The average consumer is paying $300 a year to their cable company to rent a HD DVR every month. And most of them don’t give you any where near the functionality that TiVo does.

    1. The difference of course is that your cable company is going to give you its DVR for free for 3 or 6 months, whereas buying a Tivo + lifetime subscription sets you back a whopping 650 bucks … that’s a tough sell, especially in times like these.

      1. Agreed, you have to pay more upfront and many people won’t or can’t do that. But as TiVO DVRs become even cheaper, Tivo.com currently has the HD model on their website for $199, and when they have specials on the lifetime membership at $299, for a total investment of $500, it’s a good deal if you can afford to do it.

      2. Also, when you do buy the lifetime, you have the ability to backup your drive, upgrade it, hack it whatever. Try to do that with your Cable box and you will have your connection shut off. I don’t have 2 TiVos because I cannot adapt to new technologies, TiVo just rocks!

    2. TiVo is far superior than the ‘TiVo interface’ added on to the Comcast cable box. I love the interface, being a long time user, and the ease of use of having my programs all in one place is great. I can also program my TiVo from the internet or my phone. I could bring my laptop down to my TV and hook it up to watch shows, but I don’t. I do watch videos on the laptop, but longer shows, I watch on TiVo.

  7. Encrypted digital TV is causing the death of Tivo. You have to add another $6/mth to rent cable cards.

    I hope the FCC forces the industry to drop the encryption on signals you have paid to receive.

  8. Why is Tivo losing subscribers? We all know it’s a superior DVR, but Tivo has become an advertising platform. Anyone annoyed by all the ads on Tivo?

    1. I don’t think this is the reason. It is the “free” DVRs that come from the cable companies. I think we get a little spoiled now-a-days when we can skip commercials. My kids get really annoyed when I tell them we can’t fast forward through the commercial when watching a live show. They don’t understand.

  9. Will Hulu Become a Blockbuster? Monday, December 28, 2009

    [...] that Fancast Xfinity and Hulu aren’t actually “complementary” after all, or if the service truly does make DVRs irrelevant, or if… Well, there are a lot of ifs for Hulu right now. But 2010 will probably be the year [...]

  10. Tivo’s ability to record free over-the-air HD channels is what makes it leaps and bounds better than the crap Directv DVR’s. I don’t pay for anything now (except the one time Tivo subscription) and I can watch all my favorite cable type shows (Daily Show, etc) on Hulu streamed to my TV. I have cut my monthly costs by $100 just by getting a Tivo and using the antenna on my roof.

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