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Old 06-28-2004, 10:03 AM   #1 (Print)
swhitmore
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research for Forbes.com column on TiVo

Greetings to all:

My name is Sam Whitmore, media columnist for Forbes.com. I'm embarking on the process of writing a column about TiVo from a business angle. As part of my research, I'd love for as many of you as possible to give me some perspective on TiVo the company.

Specifically, I'd like your suggestions on whom to interview for the column. So far I've identified Josh Bernoff of Forrester Research, and of course a representative from TiVo itself.

I'd also like your views/comments on the following topics, many of which I've gleaned from TiVo's most recent 10-Q statement to the SEC.

* According to the June 9 WSJ, CEO Mike Ramsay recently told an investor's conference that TiVo's relationship with DirecTV is still strong and there's no talk of changing it. According to TiVo's most recent 10-Q, TiVo is "highly dependent on our relationship with DirecTV for subscription growth." Are any of you worried that News Corp. will drop TiVo for NDS, thereby hurting TiVo's ability to scale its subscriber base?

* Does anyone feel frustrated that TiVo has lost money for eight straight quarters, when it clearly has built a name and brand synonymous with a product category, as Kleenex did for facial tissues and Jell-O did for gelatin desserts?

* Does anyone have a comment on the fact that TiVo can't seem to make money selling hardware? According to the 10-Q, "although volume of units sold increased for the three months ended April 30, 2004 by approximately 37% from the year ago period, the sales price per unit decreased by nearly the same percentage."

* How soon do you think TiVo will sell a hardware unit that records HDTV programs? Is HDTV important?

* What do you think of TiVo's strategy to enable the capture of programs and data from the Internet? Exciting? Will this be a path to profit for TiVo?

* In the 10-Q, TiVo says it seeks to develop new revenue streams, one of which is electronic commerce. Would you enjoy being able to buy products and services using your TiVo remote, as many of us currently do with our PC (or Macintosh) keyboard and mouse?

* How many of you have signed up for a "lifetime" subscription to TiVo's software? In the 10-Q, TiVo reveals that after four years, the company is obligated to serve "lifetime" customers but no longer can receive any revenue from them. As a subscriber, do you feel any remorse about this?

* In general, what do you think Forbes.com readers should be told about TiVo the company, from a BUSINESS point of view?

Please note that I do not own a TiVo unit but that I have seen many, and have deep respect for what the company has done since its inception in 1997. I'm relying upon you -- the TiVo expert -- to give me guidance as I shape the tone and substance of this column.

Best regards,
Sam Whitmore
mediasurvey@msn.com
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Old 06-28-2004, 10:05 AM   #2 (Print)
Timur
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Isn't Forbes the magazine for executives who make way too much money and yet still feel the need to layoff 1/4th of their workforce to "increase shareholder value"?

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Old 06-28-2004, 11:15 AM   #3 (Print)
jmoak
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Quote:
quotes from News Corp's conference call, November 5th, 2003:

Moderator
Thank you. That will be from the line of David Miller with Sanders Morris. Please go ahead.

D. Miller
Yes. Hi. Good afternoon. A question for Rupert; I wanted to get your thoughts on PVRs in general, specifically TiVo and what you see for TiVo as a PVR add-on for Direct TV after the GMH acquisition closes? Do you see actually orphaning or abandoning TiVo as a PVR add-on feature in favor of NDS, which is obviously your subsidiary company?

R. Murdoch
No. I think we’ll be looking at it very closely. We admire TiVo. We also have seen great success of the NDS PVR in London and maybe we’ll be offering both. There’s been no decision taken on that yet.


(btw, Mr. Miller was quoted not a week later in the media saying that "Directv will dump Tivo", quite in spite of the reply he received above.)

There have been absolutely no announcements of anything different and NDS continues to state that they have no contract to provide pvr's to Directv and are not in negotiations for one.

Churn rates for Directv subscribers who use the Directv/Tivo pvr are less than 0.5% and continue to be the lowest in the industry, cable included.

DIrectv just released a HD pvr based on the Tivo system and a new, low cost Directv/Tivo pvr has been announced and verified by Mr. Ramsey for release by the end of the year.

The only sources that mention a possible Directv/NDS pvr are "expert" stock analysts and the media, who seem to do so frequently, with absolutely no basis for their statements other than an active imagination or a possible attempt at stock price manipulation.

Am I "worried that News Corp. will drop TiVo for NDS"? Not at all.

Am I curious as to why, despite the facts, the media continues to state "Directv will dump Tivo"?

Very.

I look forward to your article.
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Old 06-28-2004, 11:50 AM   #4 (Print)
samkuhn
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Does anyone have a comment on the fact that TiVo can't seem to make money selling hardware? According to the 10-Q, "although volume of units sold increased for the three months ended April 30, 2004 by approximately 37% from the year ago period, the sales price per unit decreased by nearly the same percentage."


I would assume this pricing structure is Tivo's decision. They could keep their hardware prices up if they felt like it. I think they (wisely) have decided that they are better off building a larger base of subscription paying users. Churn is very very low among Tivo users (you'll have to review previous calls to find out exact numbers, I don't know them). A larger subscriber base also provides Tivo with greater revenue from advertising buy ins such as the "yellow star" promotional pieces, or the promo Home Media pieces. I assume they plan to make a bit of money off any Netflix-style internet movie delivery deal. In all these cases, more hardware owners, even if they sold them the hardware at a slight loss, is to their advantage.
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Old 06-28-2004, 11:53 AM   #5 (Print)
samkuhn
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How soon do you think TiVo will sell a hardware unit that records HDTV programs? Is HDTV important?


They sell one for use with DirecTV now. Tivo could clearly produce an over-the-air HDTV device. I think they don't due to limited demand. People want to record their HDTV programs from both OTA and cable or from Sat. Now that the cable-card standard has been set, I would look for a "stand alone" HDTV Tivo that can record over-the-air and cable-based HDTV programs sometime in the next 6 months.

Given that Tivo is sold to TV junkies and/or gadget geeks (or people they influence), clearly something like HDTV support is important in the long term. If Tivo failed to produce an HDTV OTA/cable unit in the next 12-18 months it would be troublesome as users would look elsewhere (e.g. their own cable company's equipment).

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Old 06-28-2004, 12:05 PM   #6 (Print)
swhitmore
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Thank you samkuhn and jmoak for your thoughtful and useful pointers... jmoak, I'm not sure why some media people are smelling blood with DirecTV... it's interesting Rupert says they might offer both.
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Old 06-28-2004, 12:06 PM   #7 (Print)
samkuhn
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At the risk of sucking all the air out of the room...
Quote:
* In general, what do you think Forbes.com readers should be told about TiVo the company, from a BUSINESS point of view?


* High level of customer retention (very low churn)
* Large patent portfolio regarding DVR technology
* Tivo's software is of unmatched quality and functionality
* Independent status allows development of unique arrangements (e.g. yellow stars, Netflix video-on-demand, DirecTV partnership, AT&T cable parternship (now old and void), multiple hardware licensees/developers, Home Media features)
* Investors with deep pockets and patience for profitability back the company
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Old 06-28-2004, 12:26 PM   #8 (Print)
Mr. Funny Pants
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Quote:
Originally posted by samkuhn
At the risk of sucking all the air out of the room...


* High level of customer retention (very low churn)
* Large patent portfolio regarding DVR technology
* Tivo's software is of unmatched quality and functionality
* Independent status allows development of unique arrangements (e.g. yellow stars, Netflix video-on-demand, DirecTV partnership, AT&T cable parternship (now old and void), multiple hardware licensees/developers, Home Media features)
* Investors with deep pockets and patience for profitability back the company


He's a reporter, not an evangelist. I'm a Tivo addict, but even I wouldn't say something like, "...unmatched quality and functionality..." There are lots of ReplayTV owners who love their machines as much as Tivo owners, and many who have been exposed to both prefer it to Tivo. I don't, and you obviously don't, but the fact that there is a great deal of debate on the issue should eliminate the use of words like "unmatched."
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Old 06-28-2004, 12:28 PM   #9 (Print)
jmoak
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Originally posted by swhitmore
...it's interesting Rupert says they might offer both.

Interesting, but they have never made any moves to do so. I think it was more of an attempt not to belittle NDS in front of the stock holders.

Now don't get me wrong, if another pvr came out that was better and more reliable than Tivo, I'd jump in a heartbeat.

... but so far, for my needs, no one has even come close.
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Old 06-28-2004, 12:39 PM   #10 (Print)
ZeoTiVo
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Re: research for Forbes.com column on TiVo

Quote:
Originally posted by swhitmore
Greetings to all:

I'd also like your views/comments on the following topics, many of which I've gleaned from TiVo's most recent 10-Q statement to the SEC.

* According to the June 9 WSJ, CEO Mike Ramsay recently told an investor's conference that TiVo's relationship with DirecTV is still strong and there's no talk of changing it. According to TiVo's most recent 10-Q, TiVo is "highly dependent on our relationship with DirecTV for subscription growth." Are any of you worried that News Corp. will drop TiVo for NDS, thereby hurting TiVo's ability to scale its subscriber base?

a better question to ask is how many subscribers would drop/"not start using" DirectTV if they stopped supporting/supplying TiVo based DVRs. I think the answer to that question would clear the air on whether DirectTV has any plans to no longer use TiVo. Could there be competition from a low cost NDS box, not likely as TiVo is working on a low cost TiVo box as well. NDS would have to give theirs away for free to even compete.
Quote:
* Does anyone feel frustrated that TiVo has lost money for eight straight quarters, when it clearly has built a name and brand synonymous with a product category, as Kleenex did for facial tissues and Jell-O did for gelatin desserts?

I am not frustrated but then I do not work for TiVo. It seems to me that TiVo is working on business plans to make money from a stand alone subscriber base (and let the DirectTV cash cow continue as it will) They are changing their business plan from one of selling the software to a Cable company for royalties to one of making their own profit from their own subscribers - this I think will turn the corner to profits in a year after the plans get put into play and the company will stay profitable
Quote:
* Does anyone have a comment on the fact that TiVo can't seem to make money selling hardware? According to the 10-Q, "although volume of units sold increased for the three months ended April 30, 2004 by approximately 37% from the year ago period, the sales price per unit decreased by nearly the same percentage."

TiVo is not a hardware company and never really has been a serious one. You need more than one product line to be a profitable hardware company in these days of global competition and thin margins. That is why the gladly help real hardware manufactures produce TiVo units. This trend will continue while TiVo keeps its core compentency of being able to engineer really great model specs for other manufacturers.
Quote:
* How soon do you think TiVo will sell a hardware unit that records HDTV programs? Is HDTV important?

answered in other replies, but I would repeat the idea that TiVo is engineering a cable card spec HD box that will blow the current series 2 out of the water and be price competitive with other HD DVRs right off the bat.
Quote:
* What do you think of TiVo's strategy to enable the capture of programs and data from the Internet? Exciting? Will this be a path to profit for TiVo?

sign me up as soon as it is available, this will make TiVo stand out from the pack in a big way and really quite down all those "TiVo-like" comparisons from competitors who are really just plain old DVRs with really dumb software in comparison to what TiVo has already
Quote:
* In the 10-Q, TiVo says it seeks to develop new revenue streams, one of which is electronic commerce. Would you enjoy being able to buy products and services using your TiVo remote, as many of us currently do with our PC (or Macintosh) keyboard and mouse?

you have the concept slightly wrong there, I do not think TiVo is going to try to be an Amazon or Buy.com, nor will it try to directly transact purchases from say BestBuy or Circuit City. What it will directly sell is subscription to downloadable content not available on the TV channels - eg - a NetFlix like subscription to movies as they come out on DVD, or special media content that goes deeper or is from newer unfamous sources etc.. Oh yes and Music as well.
now on the purchase of durable goods they will make money from advertising that is very targeted to a demographic with known viewing habits. this advertising will allow direct interaction much like the internet does BUT the audience will be sitting in their easy chair watching entertainment and knowing that if they take 30 seconds on something the show will pick up right where thye left off. When I go on the internet I am usually going to a specific place or looking for specific info, the only internet ad that ever got me was NetFlix as I finally saw enough of them to decide to go back and try the company again, as a rule I maybe click on .0001% of the ads Isee online. So the ads on TiVo will be more likely to be acted on, and the rate is very accurately determined on that, and TiVo can devise ways to get the transaction service for the advertiser on screen to further the contact and make a sale, but not with TiVo handling the transaction save for forwarding consumer info when the consumer elects to forward it
Quote:
* How many of you have signed up for a "lifetime" subscription to TiVo's software? In the 10-Q, TiVo reveals that after four years, the company is obligated to serve "lifetime" customers but no longer can receive any revenue from them. As a subscriber, do you feel any remorse about this?

no, it is their business model and they have to constantly reevaluate and amortize costs properly just like any other company
Quote:
* In general, what do you think Forbes.com readers should be told about TiVo the company, from a BUSINESS point of view?

confirm their is a new business model/plan TiVo is persuing and get some good industry analysts to weigh in on it
Quote:

Please note that I do not own a TiVo unit but that I have seen many, and have deep respect for what the company has done since its inception in 1997. I'm relying upon you -- the TiVo expert -- to give me guidance as I shape the tone and substance of this column.

Best regards,
Sam Whitmore
mediasurvey@msn.com
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Old 06-28-2004, 12:59 PM   #11 (Print)
samkuhn
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He's a reporter, not an evangelist. I'm a Tivo addict, but even I wouldn't say something like, "...unmatched quality and functionality..." There are lots of ReplayTV owners who love their machines as much as Tivo owners, and many who have been exposed to both prefer it to Tivo. I don't, and you obviously don't, but the fact that there is a great deal of debate on the issue should eliminate the use of words like "unmatched."


That was not meant to be a Tivo-boosting statement. I would argue that Apple survives solely because they know how to design a good product that is easy to use. I don't use Apple's products, but I recognize that they get a fair amount of business because of the design of their products.

Tivo and Replay both produce a quality product. It was an oversight of mine to leave Replay out of the statement. This level of production is in sharp contrast to the limited ability and quality of most of the other PVR/DVR units that are marketed and sold by sat or cable companies.

Will you agree with this statement?
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Old 06-28-2004, 01:09 PM   #12 (Print)
samkuhn
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Quote:
Please note that I do not own a TiVo unit but that I have seen many, and have deep respect for what the company has done since its inception in 1997. I'm relying upon you -- the TiVo expert -- to give me guidance as I shape the tone and substance of this column.


You should ask Tivo if you can get a press loaner. I'd be surprised if they didn't offer such an item. If they don't, they have a 30 day trial period on new purchases.
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Old 06-28-2004, 01:31 PM   #13 (Print)
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Quote:
"quote:
--------------------------------------------------------------------------------
How soon do you think TiVo will sell a hardware unit that records HDTV programs? Is HDTV important?
--------------------------------------------------------------------------------



They sell one for use with DirecTV now. Tivo could clearly produce an over-the-air HDTV device. I think they don't due to limited demand. "
The HDTiVo that is already being sold has the ability to record HD programs from both the satellite AND over the air.
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Old 06-28-2004, 01:45 PM   #14 (Print)
samkuhn
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The HDTiVo that is already being sold has the ability to record HD programs from both the satellite AND over the air.

Can it be used only OTA? I was under the impression that a subscription to DirecTV was required for it to be used.
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Old 06-28-2004, 01:51 PM   #15 (Print)
swhitmore
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Good idea about the loaner, but my deadline is too tight... I can always visit friends... but the thrust of the column will be TiVo's ability/lack thereof to stay nimble and nagivate the hazards, thereby capturing the commercial success it has already captured culturally...
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Old 06-28-2004, 01:53 PM   #16 (Print)
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and thank you ZeoTivo... very nice stuff
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Old 06-28-2004, 02:01 PM   #17 (Print)
willardcpa
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Quote:
"Greetings to all:

My name is Sam Whitmore, media columnist for Forbes.com....
Are any of you worried....
Does anyone feel frustrated....
Does anyone have a comment on the fact that TiVo can't seem to make money....
As a subscriber, do you feel any remorse about this?.....
Please note that I do not own a TiVo unit but that I have seen many....
Best regards,
Sam Whitmore
mediasurvey@msn.com "
Looks to me like you are just looking for the negative things, or are looking for us to corroborate your preconcieved notions. In order to be subjective shouldn't the questions be "neutral". This reminds me of some telephone "political polls" that I have been asked to participate in over the years - that when you listen to the questions you can tell that the pollsters are only trying to obtain validation for an agenda that they are promoting. "Mr. Jones, does it frustrate you that the incumbant has done nothing to stop crime in the community?"

And why ask me if I have any "remorse" about purchasing a lifetime subscription. Merriam Webster defines remorse as "a gnawing distress arising from a sense of guilt for past wrongs". You ask a convicted criminal if he has any remorse for committing a crime. You don't ask a customer if he has any remorse for making an informed business decision, one that obviously helped out a company in it's infancy with cash flow, and one that has worked out well for him (as opposed to "buyers remorse") as well.

I fully expect your article to end up being "negative" no matter what you are told here.

You don't own a tivo so you probably just don't understand it. But please tell the Forbes readers that from a "business point of view" many of us users are elated with our tivos and are doing anything within our power to ensure that it succeeds. I personally own eight that are subscribed, have given away four as gifts, and have one in storage.

Its a little like the "Harley-Davidson syndrome". If I have to explain it to you - you won't understand.
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Old 06-28-2004, 02:28 PM   #18 (Print)
peteypete
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Hi Mr. Whitmore,

I think alot of articles that write about Tivo are adversarial. I'd like to see more about how TiVo is actually good for the cable companies and the networks. For example, for the past two or three years I watched ZERO TV. None. But now I watch much more because Tivo makes it easy. This is a boon to advertisers.

I think Cable companies don't know how to transform the advertising dollars that are under attack by DVR's but that they are very interested in how to do it.

I also think that there is a network effect with tivo. The value of the company increases exponentially as subscribers are added.

I am also looking forward to downloading internet content. I hope Tivo can be the Google of media content for the TV where it makes finding things I enjoy easy.

I look forward to the article, and hope it goes beyond the current analysis of Tivo.
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Old 06-28-2004, 03:14 PM   #19 (Print)
pgogborn
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Re: research for Forbes.com column on TiVo

Quote:
Originally posted by swhitmore

* In general, what do you think Forbes.com readers should be told about TiVo the company, from a BUSINESS point of view?

I think they should be told that TiVo Inc. can not seem to make up its mind what its core activity is, shows a naivety in choosing its business partners and has a remarkable capacity for shooting itself in the foot. I also think that they should be told that the lifetime subscriptions are a demographic time-bomb waiting to go off at a most inconvenient time.

For example, is TiVo Inc's core activity subscription income, or is it licensing income, or is it advertising income?

What on earth possessed TiVo Inc. to partner with News Corp/NDS in the UK? They gave Sky/News Corp the contract to market the TiVo in the UK, even though Sky/News Corp/NDS were launching the rival Sky+ PVR in the UK. The Sky+ vastly outsold the TiVo and the TiVo is no longer manufactured for the UK market. Perhaps TiVo Inc. had not heard of expressions along the lines of "If you jointly buy a dog with News Corp, you end up with the half that dies".

A minor example of TiVo Inc's capacity to shot itself in the foot and not be able to make up its mind was the announcement of TiVoToGo. As originally announced, TiVoToGo owners would be required to use a dongle. Many people instantly pointed out the folly of requiring a dongle. It has now been announced a dongle will not be required, it is a pity TiVo Inc did not get it right first time.

Perhaps a greater example of TiVo Inc's capacity to shoot itself in the foot and not be able to make up it's mind is its latest talking up of electronic commerce as a revenue stream. This follows past talking up, now muted, of such things as licensing income. It is a major shooting in the foot if they want to keep DirecTV as a customer. There is no way that News Corp would allow an outside company to be the gate-keeper to advertising income on one of its television platforms. By the way, NDS software-developers are giving a high priority to making their own DVR advertiser friendly.

The estimated four year life of TiVos seems to be an under-estimate, It is not just that they will loose revenue on life-time subscription boxes that exceed the four year life. in the past they have said such boxes will incur significant looses. Although at the moment major numbers are not involved, they will become major at about the same time as the contract with DirecTV and probably DirecTV subscription income comes to an end.

Perhaps it should be asked, "Will News Corp kill TiVo Inc. or will they buy it?"

The only thing I do not directly worry about in your shopping list of concerns is that TiVo Inc. can't seem to make money selling hardware. Not making money selling hardware could be a smart move if it drives up recurring subscription income.

However, I do wonder what other manufactures think about TiVo Inc. selling discounted TiVos on their own web-site. At the moment it seems that other manufacturers have retreated to providing TiVos with extra features (e.g. DVDs) leaving the basic stand-alone TiVo market to TiVo Inc. Perhaps it should be asked if TiVo Inc. has cannibalized its own market by manufacturing and selling basic TiVos. Perhaps it would be better if other major players were still 'manufacturing' basic TiVos.

Edited to add 'basic' in last line.

Last edited by pgogborn : 06-28-2004 at 04:01 PM.
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Old 06-28-2004, 08:39 PM   #20 (Print)
Mr. Funny Pants
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Quote:
Originally posted by samkuhn
That was not meant to be a Tivo-boosting statement. I would argue that Apple survives solely because they know how to design a good product that is easy to use. I don't use Apple's products, but I recognize that they get a fair amount of business because of the design of their products.

Tivo and Replay both produce a quality product. It was an oversight of mine to leave Replay out of the statement. This level of production is in sharp contrast to the limited ability and quality of most of the other PVR/DVR units that are marketed and sold by sat or cable companies.

Will you agree with this statement?


It would have been perfectly fair to point out that Tivo and RTV are universally agreed upon to be more sophisticated and polished than more generic PVRs. As you only mentioned Tivo, that's all I had to go on.
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Old 06-28-2004, 10:17 PM   #21 (Print)
Mike500
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All of the analyst see the coming split between DirecTV and TiVo as a negative. But, that really might not be so.

Currently, DirecTV administers all DirecTV based TiVo accounts, and users pay only a single $4.95 fee for multiple units. DirecTiVo hardware has been highly by DirecTV to acquire subscribers. TiVo service has been highly discounted to do the same.

If DirecTV no longer administers its TiVo accounts, TiVo would be able to charge the same $12.95 monthly fee for each receiver and the $6.95 fee for each additional outlet.

From what I've heard, with the introduction of the rumored new Sky based DirecTV DVR, Tivo will introduce a DirecTV receiver with a single lnb outlet. This receiver will include the 3 day manual record TiVo Basic, like the current Toshiba and Pioneer units. In effect, these will enhance TiVo's revenue stream.

TiVo effectively took the most advantage route with it's contract with DirecTV. It expanded its installed base four fold.

I do not see many current DirecTiVo users abandoning their current DirecTiVo receivers, even if the rates are increased to that of the Stand Alone TiVo schedule.

The TiVo software is so much far superior to the software in the Dish Network DVRs and likely the Sky DVRs. Even if they offered free service or nearly free service, current TiVo users would try them and come back to TiVo.
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Old 06-29-2004, 05:25 AM   #22 (Print)
swhitmore
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This is terrific, folks. I'm on deadline today for something else... on Wednesday I'll compile what you've sent -- will react to specific posts here in the forum -- and will begin drafting the piece.

Meanwhile, anyone else want to weigh in?
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Old 06-29-2004, 08:57 AM   #23 (Print)
JustAllie
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Re: research for Forbes.com column on TiVo

Quote:
Originally posted by swhitmore
* In the 10-Q, TiVo says it seeks to develop new revenue streams, one of which is electronic commerce. Would you enjoy being able to buy products and services using your TiVo remote, as many of us currently do with our PC (or Macintosh) keyboard and mouse?

* How many of you have signed up for a "lifetime" subscription to TiVo's software? In the 10-Q, TiVo reveals that after four years, the company is obligated to serve "lifetime" customers but no longer can receive any revenue from them. As a subscriber, do you feel any remorse about this?


For the first question I quoted here, I probably would use this functionality if it were available and the offer were something I wanted. I have already trusted TiVo with my credit card number, anyway.

For the second question quoted above, I have two Series 1 TiVos with lifetime subscriptions, both of which I have owned for more than four years. TiVo got a relatively big chunk of money from me early, when they needed it. In trade, they now don't get a small monthly revenue stream from me on those machines. It was their business model and I can't imagine why I should or would feel remorse about giving them my money early in the game. (There was always a chance that my machines would die before the breakeven point, after all.)

I'd also like to point out that I have been personally responsible for convincing at least six people to buy TiVos, and if those people evangelized anyone else, TiVo has actually done exceptionally well thanks to having me as a happy customer. The lifetime subscription option played an important role in making me a happy customer.

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Old 06-29-2004, 09:52 AM   #24 (Print)
MsUnderstood
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* Does anyone have a comment on the fact that TiVo can't seem to make money selling hardware? According to the 10-Q, "although volume of units sold increased for the three months ended April 30, 2004 by approximately 37% from the year ago period, the sales price per unit decreased by nearly the same percentage."

They don't need to make money on the units, the need to make money on the subscriptions. Satellite radio is doing the same thing--they sell the units as low as they can and hook you with the subscription. Heck Dish TV is GIVING AWAY their satellite equipment to hook you into the product.

* How soon do you think TiVo will sell a hardware unit that records HDTV programs? Is HDTV important?

HDTV will not be important until more channels have HDTV. I ordered HDTV from my cable company. I got 3 local channels (NOT FOX), plus 2 HDTV showcases for $5.00 a month. I had an HBO and showtime package that included HDTV but did not watch it because I could see the east coast programs earlier. Long story short, I decided quantity over quality and dropped HDTV.


* In the 10-Q, TiVo says it seeks to develop new revenue streams, one of which is electronic commerce. Would you enjoy being able to buy products and services using your TiVo remote, as many of us currently do with our PC (or Macintosh) keyboard and mouse?

It is a fascinating idea. Society is already using the internet and becoming comfortable with that. Why not give the person the ability to buy a book related to a documentary just watched or push products through the TIVO. It is interesting that TIVO has minimized commercials for TIVO users and now wants to put them back in; it is a tricky solution.

* How many of you have signed up for a "lifetime" subscription to TiVo's software? In the 10-Q, TiVo reveals that after four years, the company is obligated to serve "lifetime" customers but no longer can receive any revenue from them. As a subscriber, do you feel any remorse about this?

Why would I feel remorse? The idea is that I give them a wad of cash up front to INVEST in getting more consumers and after 4 years (if my product lasts that long) they thank me for my investment by letting me use the service for free. I am gambling too--if my product breaks within 2 years, TIVO has won because I could have saved by doing the monthly fee.

* In general, what do you think Forbes.com readers should be told about TiVo the company, from a BUSINESS point of view?

My cable company has informed me that they are bringing out a PVR for $10 a month that will record multiple programs. TiVO is going to need to work heavily on getting more subscribers to their product before the cable companies take over. I would hate to see TIVO fall to cable companies (who have the ability to charge whatever, change and control, monitor your viewing).

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Last edited by MsUnderstood : 06-29-2004 at 09:59 AM.
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Old 06-29-2004, 11:35 AM   #25 (Print)
pgogborn
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Quote:
Originally posted by swhitmore
Meanwhile, anyone else want to weigh in?

I will go for a second bite of the apple.

I think an interesting question is "Is TiVo evolving fast enough to survive in the jungle?"

One of the things that made TiVo special when it was launched was the high standard of its interface and its unique access to high quality program listings.

Perhaps the interface is now starting to show its age. The originally released interface, together with the subsequently released half hearted 'folders' view, is up to the task of displaying the number of programs that can be stored on the size of hard drives that were typical when the TiVo was first released. However, the size of hard drives / the number of programs that can be potentially stored is rapidly expanding. As yet there is no sign of an upgraded interface that will assist the cataloging and retrieval of recordings on larger hard drives.

Although it has always been unclear what the TiVo subscription charge was actually paying for, there has been no doubts that the daily program listings that were available for download as a result of paying the subscription were of of high quality and an unique resource. However, Tribune Inc. who supply the TiVo electronic program guide, is now moving into supplying platform independent EPGs directly to the end user. What used to be a unique selling point for the TiVo is no longer so.

The problems of evolution also intersect my previous comment about TiVo Inc's capacity to shot itself in the foot and not be able to make up its mind. When TiVo Inc. announced the Home Media Option, it was as a paid extra to the basic software.

I feel that it would have been better to have rolled HMO out as an evolutionary advance that was an integral part of the basic software. As it is, there has now been a change of direction and it has now been announced that in future that HMO will be an integral part of the basic software at no extra cost. TiVo Inc. has acknowledged that this is upsetting to people who previously paid for HMO and is offering partial refunds to people who complain, but I think the greater damage was done by TiVo Inc. seemingly having a mindset that software enhancements was something that should be done to generate an additional separate revenue stream, rather than something that should be done to maintain the supremacy of the basic product in the market place.

How DirecTV evolves also has an impact on TiVo. It seems reasonable to expect DirecTV to invest in its satellite technology, including much more secure encryption, much greater interactivity etc. In the medium term this could make existing DirecTV TiVo boxes (and all other DirecTV boxes) redundant. The financial pain of transferring people from TiVo to NDS boxes would merely be part of this exercise. (In the UK, Sky/News Corp has already undertaken an exercise where it in effect transfered all its customers from one box to another of a higher standard).

A question which I would like answered is why is the full TiVo product only available in the USA and is this sufficient territory to survive? It should be noted that the current situation is a retreat from the former situation where the full TiVo product was available in both the USA and the UK.
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Old 06-29-2004, 01:03 PM   #26 (Print)
CrispyCritter
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Quote:
Originally posted by pgogborn
I think an interesting question is "Is TiVo evolving fast enough to survive in the jungle?"
You think TiVo hasn't evolved? Recapping:
  1. 1999: TiVo sales launched. Realization they have a great product; massive optimism about sales. TiVo views themselves as developers and software suppliers. Hundreds of millions of dollars spent on advertising.
  2. 2000-2001: Sales disappointing - too hard to convey that it's worth it to the masses. .com bust means all financing dries up.
  3. 2001: Massive retrenchment. TiVo lays off a large percentage of its employees. Stops advertising. Stops UK progress. TiVo abandoned by Standalone manufacturers (Philips/Sony). TiVo forced to become a hardware manufacturer and distributor itself in order to survive (major, major change). TiVo forced to sell 1/7 of company to raise enough cash (a paltry $25 million) to get through the introduction of the Series 2 models .
  4. beginning 2003: TiVo introduces HMO as a premium product. TiVo survival looks better, but they are still in penny-pinching mode and still haven't proved to the analysts that they will survive. They still don't know if they're going to get mass market adoption, or have to be content to just survive in the high-end market (in which case charging for premium software is a necessity.)
  5. fall-winter 2003-2004: excellent sales; TiVo finally gets the subscription growth they had been hoping for years earlier. New manufacturers start coming on-board.
  6. early 2004: TiVo gets $75 million to spend to restart advertising, reduce prices, and fully go after the mass market . They can afford to abandon the premium niche market approach and in the late spring make HMO free, reduce prices further, offer a multi-TiVo discount, and get a small number of people upset at them for doing that .
I think TiVo has shown great flexibility and adapted strongly to changing circumstances. There's no doubt they could have done better if they had infinite money, but they did well to make the massive changes they needed in order to survive.

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Old 06-29-2004, 01:05 PM   #27 (Print)
jmoak
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Quote:
Originally posted by Mike500
All of the analyst see the coming split between DirecTV and TiVo as a negative. But, that really might not be so.
....

"The coming split"?????

Please give evidence of this "split", as you seem to take this as a given.

Some proof, please. Not analyst speculation, but proof.

Any announcement from Tivo, Directv, News Corp or even NDS mentioning this "split".... creditable sources will do just fine.

Please, no rumors, feelings or speculation presented as fact.

I eagerly await your response.
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Old 06-29-2004, 01:09 PM   #28 (Print)
peccles
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Re: research for Forbes.com column on TiVo

Quote:

* Does anyone have a comment on the fact that TiVo can't seem to make money selling hardware? According to the 10-Q, "although volume of units sold increased for the three months ended April 30, 2004 by approximately 37% from the year ago period, the sales price per unit decreased by nearly the same percentage."


I think the problem here is the TiVo boxes are useless unless you want to buy the
full subscription. I bought a Toshiba SD-H400 which is a DVD player with a DVR
that has TiVo Basic service included. TiVo should have the basic service included
on their boxes.

Quote:
* How soon do you think TiVo will sell a hardware unit that records HDTV programs? Is HDTV important?


HDTV is not important to me. I guess if I had an HDTV system, then it would be nice
to have an HDTV recorder of the HDTV programs.

Quote:
* How many of you have signed up for a "lifetime" subscription to TiVo's software? In the 10-Q, TiVo reveals that after four years, the company is obligated to serve "lifetime" customers but no longer can receive any revenue from them. As a subscriber, do you feel any remorse about this?


I have TiVo basic service with my Toshiba SD-H400 DVD/DVR. I have yet to be
convinced that paying for the full service is worth the money.

Quote:
* In general, what do you think Forbes.com readers should be told about TiVo the company, from a BUSINESS point of view?


I don't think they are forward thinking enough. They sell DVRs that are useless
without paying for full service while licensing a basic service to competitors (e.g.
Toshiba). They don't produce a unit that can record 2 shows at once. The cable company
DVRs can do this. They should be dealing with TV manufacturers to put a DVR
into the TV. When TVs start coming out with digital tuners that don't need the cable
settop box anymore, TiVo could capitilize by having its DVR w/basic service built
into those TVs.
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Old 06-29-2004, 01:23 PM   #29 (Print)
chipsndip
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I can't wait to see how all of this is misquoted.
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Old 06-29-2004, 01:53 PM   #30 (Print)
bkdtv
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Quote:
* In general, what do you think Forbes.com readers should be told about TiVo the company, from a BUSINESS point of view?
One thing that hasn't been adequately touched on is the competition from cable DVRs. This is Tivo's most significant threat, in the short to intermediate term, given monthly fees are still their primary source of revenue.

Tivo hasn't updated much of its core PVR functionality in more than three years. Some one argue they've become complacent. They had a massive head start, but cable isn't sitting still. Driven by competitive pressures from DirecTV with its popular DirecTivo, cable is working overtime to develop and deploy DVR solutions with comparable (or better) functionality and usability.
  1. Digeo -- a company backed by Charter Cable and Microsoft co-founder Paul Allen -- has begun to deploy a DVR solution with much of the Tivo functionality, as well as a number of capabilities the Tivo does not have. Charter has placed an order for 170,000 of these Moxi DVRs. Adelphia has ordered 25,000 and Comcast placed an initial order for 40,000. Thus far, the Moxi has been deployed in two markets, Rochester, Minn (Charter) and Ventura, CA (Adelphia), with a number of new markets scheduled for launch in July.
  2. Microsoft -- they've adapted their popular UltimateTV platform for cable. It's known as Foundation Edition 1.7, and it also features many of the Tivo's core features, including search by title and the ability to record only new episodes, and ignore old and repeat episodes. The feature datasheet is right here. Comcast announced an agreement with Microsoft to deploy this software on up to five million STBs and DVRs, beginning with the Motorola 6412 later this year.
  3. Scientific Atlanta -- their latest DVR software for the 8000HD/8010HD HDTV DVR incorporates new episode recording features, including a first-run option to record only new episodes of a program, and ignore old and repeat episodes. Time Warner has deployed this software in South Carolina, Austin, TX, in parts of Central NY, and on some of its Brighthouse cable systems. Cox announced yesterday that they were deploying the SA8010 HDTV DVR with this new software in San Diego, Gainesville, Fla., Santa Barbara, Calif., Phoenix, Las Vegas, Oklahoma City, North Carolina, and Northern Virginia markets.

    I am also beta testing this DVR for Comcast in N. Virginia.
Note all of these are HDTV DVR platforms that record both SDTV and HDTV. Moreover, all of these are dual-tuner DVR platforms that can record two different HDTV channels at once, while playing back a previous recording. Tivo does not yet offer a HDTV DVR platform for cable -- their only HDTV platform is the $999 DirecTivo for DirecTV. Comcast charges $9.99/mo for HDTV DVR service, while Charter, Cox, and Time Warner Cable charge $10-$19/mo. This includes both the rental and DVR fee. By comparison, Tivo charges $12.99/mo for DVR service with its standalone product, which consumers must buy -- and this is a single-tuner product that can record only one channel at a time.

For three years, Tivo has had near monopoly on a number of "must have" DVR features -- like the ability to record only new episodes and ignore repeats. That is coming to an end with the latest DVR platforms from Digeo (Moxi) and Microsoft (Foundation Edition 1.7). Even Scientific Atlanta has joined the fray with its newest v1.1 DVR software. All three of these platforms can record only new episodes and ignore repeats. All three of these platforms feature name-based recording to record programs regardless of the time and day of week they are shown; they do not depend on timeslot-recording like traditional VCRs and previous cable DVRs.

Last edited by bkdtv : 06-29-2004 at 02:16 PM.
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