TiVo (s TIVO) has been under pressure to stop (or at the very least, slow) the subscriber losses it has seen in recent years, but it’s latest plan — to offer cut-rate prices on its Premiere DVR while increasing subscription rates — may be its last, best chance to do so.
The DVR maker lost 464,000 subscribers over the past year, dropping from 2.7 million paid users to just under 2.3 million subscribers in the most recent quarter. It’s now betting that a recent holiday promotion, which prices the TiVo Premiere at $99, will help to get new customers for its DVR. That promotion cuts $200 from the upfront cost of purchasing a TiVo, putting it in reach of more buyers’ budgets. But it increased the monthly subscription cost from $13 a month to $20, which will drive up its average revenue per user.
A $99 TiVo also puts it in the same price category as Apple TV (s AAPL) and Roku broadband set-top boxes, and prices it well below the Boxee Box by D-Link and Logitech’s (s LOGI) Google TV Revue box. Considering all the functionality that TiVo Premiere has built in, including streaming video from Netflix, (s NFLX) Hulu Plus and Amazon (s AMZN) Video on Demand, the new upfront price of the DVR is a relative value.
In comparing TiVo’s offering to other device on the market, CEO Tom Rogers said on yesterday’s earnings call:
“…What about the rise of all those retail gadgets and specialty devices like Apple TV and Google TV. They claim to have the answer to bring in internet content to the television. The answer is, they only address a small component of the future television experience.
The devices out today are all essentially fighting for what we call Input 2 on the TV set. None of them deliver and marry the complete spectrum of content from traditional linear channels, which still account for some 99 percent of all TV viewing, to cable video on demand and internet content, nor do any of them give you the ability to search across all this content at the same time. For our part, TiVo is happy to own input 1 where we uniquely tie in the new TV options to the traditional one.”
In fact, TiVo has already built in much of the functionality that Google (s GOOG) has sought to enable with its Google TV OS, enabling search between linear broadcast programming and streaming content. Not just that, but while Google is struggling with broadcasters blocking their streams on Google TV-powered devices, TiVo has gotten online content from three of the top four broadcasters through its Hulu Plus deal.
The $20 a month monthly subscription charge isn’t a good deal over the life of a TiVo, but pricing its DVRs within range of other CE boxes could help it to gain traction in a pretty fragmented market. While it’s too early to tell if a $99 TiVo will appeal to customers, the company is guardedly optimistic that its subscriber numbers will improve as a result of the promotion. On the earnings call, Rogers said:
“It’s obviously too early to tell how the holidays will do, because we really aren’t in the throes of it yet. But certainly based on feedback that we’ve gotten, it appears promising and we would expect based on our own view that our year-over-year comparison of subs will not only be better than last year’s fourth quarter, but better than the improvement we saw this quarter relative to the last third quarter.”
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