* 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? As a user and shareholder of TIVO I find this news troublesome. With the cable companies freezing tivo out, the only other viable company was Direct TV. Without this relationship who will they turn to. Scaling isn't my greatest concern, because I believe the TiVo tech and software will be licensed by other companies (embedded systems). TiVo is superior to its competition in many regards, and it has avoide the controversy of them as well. I think also the current subscriber base with DirecTV units would be unhappy at the ending of that relationship. I'm worried about anything that threatens the loss of service for my Tivo, this included. DirecTV has been a less-than-ideal partner for Tivo from a user perspective, which leads me to believe that they either don't understand Tivo or that they are aggressively restricting things to leverage pricing with Tivo. DirecTV's stubborn refusal to patch the terrible lag and slowness of the menu system on DirecTV DVRs (slower even than my Series 1 standalone Tivo) as well as their exclusion of the HMO package from Tivo make me worry that they don't quite "get it" yet, and might switch to a less useful generic PVR system, just to save money. I am worried about this. Tivo stands a far greater chance of long term success as a software vendor than a hardware one. Given the components in the Xbox and the upcoming Playstation, they need a media partner to keep going at the scale there business model depends on. But a media partner continues to be a double edged sword because of DRM (more on that later). That said . . . they have built a cult following and if they lose the media tie completelythey could go it alone using the Apple model. Focus on a specific sector (Apple did it with Design, Tivo would need more early adopter techies) -and give these users more access to the box, this would require astronger consumer revenue model as opposed to their current corporate tie in model. It would be very appealling to the open source community and if they did this they could greatly accelerate development of new features. There are a lots of niche players in this part of the PVR market. Tivo could own the entire pie in this area if they wanted to. Further, this would allow them to move to a pure software play, a lot more profitable model. Here's one: freaking HMO! There is absolutely no reason whatsoever why DirecTV shouldn't be offering this, and screaming from the rooftops about it. This one small thing would blow every single bit of Dish Network competition into low earth orbit. You work for Forbes... go call Rupert Murdock and ask him what the hell he's thinking. Tell him it's not 1995 anymore. Speaking of DirecTV, no, I'm not worried about them dropping their TiVo combo boxes in favor of some other DVR. TiVo's got the feature set, and more importantly, the user base. DTV would be foolish to infuriate over a million users overnight. It concerns me a little, but I think competitive pressures may stop DirecTV from making that move. DishNetwork has its own PVR already, and part of DirecTV's competitive advantage in that market is that TiVo produces a much, much nicer user experience. So far no other PVR has come close to TiVo in terms of ease of use or functionality. If DirecTV suddenly drops TiVo support, I'll shop around for whichever content provider has the best service, and they may well lose me as a customer. As I understand it, the contract with DirecTV won't expire until at least 2006 or 2007, giving two or more years worth of revenue and growth. By that time, the landscape for the DVR market will have most likely changed quite dramatically, and subscriber bases will already have achieved a relatively high penetration. (Relative, that is, for a product that will only have existed for some 7 or 8 years.) For something that will not have an impact for that long, and in a space that is constantly reinventing itself every six months, it doesn't make sense to read into this as a death knell for TiVo -- only another catalyst of change and evolution. I am a DirecTV subscriber and can tell you that we love our Tivo unit very much. I have young children and like that Tivo affords me the ability to watch programs I either missed or was on at an inopportune time. I am concerned that DirecTV will drop Tivo in the future due to Tivo's announced plans to derive new revenue streams from what the cable/satellite companies consider their turf. Tivo is in a difficult situation because they clearly need channel partners for distribution but are looking to compete with them over time. This is the same reason Microsoft has been so unsuccessful with its set top box initiatives. One could easily get the impression that DirecTV leveraged TIVO to get into the DVR business and learn from their experience while secretly developing their own version of a DVR. Considering that DirecTV will not allow for the latest advancements to the TIVO units, (software packages available for stand alone TIVOs), they will be that more competitive when they release their own DVRs. In January, DirecTV announced that they were changing their plans for who will build receivers for them. Gone are the days when you could go down to your local electronics retailer and pick from several manufacturer's equipment for your DirecTV service, soon you will only be able to pick from units from Hughes. As a DirecTV/TiVo user, this directly effects me and is something that I've been thinking about. I really think that DirecTV is TiVo's best chance to grow fast; if DirecTV would push the DirecTV/TiVo combo boxes more. My hope is that News Corp won't change the relationship, or make it stronger. I know it sounds sort of trite, but I can't go back to "normal TV" after my TiVo. As much as I love DirecTV for it's picture quality and such, if DirecTV stopped offering TiVos and I was unable to continue to use mine, I WOULD switch back to cable and get a normal TiVo. Other than through DirecTV, I think that TiVo could have some trouble with growing other than at a slow grass-roots pace. Direct TV, I think, is rather foolish in this regard. They could easily integrate their own version of this product into their set top boxes. Since set top boxes are the portal through which all cable/satellite viewers have their experience, Direct TV could tailor sponsorship, ad sales, direct response, and promotion to the needs of Direct TV subscribers and generate more revenue through services. Why pay for what you could do your self. So, yes, I am worried about this relationship. No, I'm not worried, although this 'issue' is weighing heavily on the stock. First, Ramsay has stated at least twice publicly (in the quarterly conference call, and in a recent press release) that TiVo is building a low-cost PVR for DirecTV for release later this year. NDS and/or DirecTV has stated previously that any NDS-based product wouldn't be ready until next year (if they were to do one). Given the current pace of adoption among DirecTV users, I'd put 1.5-2M DirecTV-TiVo units in subscribers hands by early next year. First, since this represents roughly $25M of revenue (mostly profit) into DirecTV's hands each quarter, I don't see them ever dropping TiVo. Second, Rupert has stated that he wants DirecTV subscribers to have the "best PVR experience" in the market. I don't think anyone would argue that the DirecTV-TiVo *is* the best PVR experience from an end-user's perspective. Most people that point to DirecTV shifting to NDS for PVR boxes base this decision on hardware subsidy costs (make a low cost PVR that they can give away for free to every subscriber). But a single-tuner version of a TiVo with a small hard drive (say 40-80GB these days) is within $10 of the lowest cost PVR you could make anyway. The only real cost delta would be due to the increased memory and CPU requirements of the Linux- based software, as opposed to an "embedded OS" solution. But that cost delta is a guess based on my embedded systems experience, and certainly a 'gap' that closes with Moore's law every year. Meaning, if the TiVo requires an extra 16MB of RAM over a more tightly managed system, that may add $5 today, but next year the memory chips double in size, and you'll probably have to use that size anyway to stay in the sweet spot of the memory price curve. More importantly to the Tivo vs. NDS question for DirecTV is something I haven't seen any analysts talk about - and this is what made me decide to buy more stock during the recent downturn. DirecTV charges $5/subscriber for the TiVo service. This is comparable to other cable/sat providers for "premium" PVR service. Now, if you're going to give away PVR's to everyone, you're probably going to give away a basic software feature set to go with it (which is what Dish Network is doing). I'd call that feature set the "Digital VCR" - you get the ability to do VCR-like programming, and live-TV pausing, but that's about it. But if TiVo builds a low cost PVR (which they say they're doing for release this year), TiVo already has this 'give away' software concept on the TiVo/DVD combo boxes called "TiVo Basic". So if DirecTV releases a low-cost TiVo-based PVR, running the TiVo Basic software, they've got essentially the same product as an NDS-based PVR (or any other entry level PVR for that matter). But only the TiVo-based product could be upgraded by the consumer to "TiVo Plus" software, which carries a $5/month subscription charge from DirecTV (with some split to TiVo). This gives DirecTV the ability to upsell into their premium products/services, unlike an NDS product. And since it's well known that people who take the "free trial" of the TiVo Plus software almost always stick with the TiVo subsciption after that, to not enable this upgrade path would mean DirecTV would be missing out on tens of millions in additional revenue in the first year alone. I believe TiVo has stated that the DVD combo take rates were something like 30-50% for the free trial (and they all stay subscribers if they try it). I think that would be a conservative figure for a low-cost PVR upgrade rate, especially since the subscription cost is only $5/month for DirecTV instead of $13/month. Yes, I do worry but I'm not sure who would be hurt more in the long run. I have used EchoStar's DVR and I was not impressed. I think DirecTV benefits a great deal from having its relationship with TiVo. I'm just not sure if News Corp is smart enough to know this. Having used EchoStar's unit as well as the nasty Warner Cable unit I know what a gem TiVo is. People who know anything about DVR units, I'd think, would gravitate to DirecTV. Then again, how many people really know about DVRs? yes i feel many are worried that this will happen, just like many feel its hurting tivo with no cable deal. i fell different if tivo partners with cable sure their subs will go up but now hey must split the advertising revenue. tivo said they will spend 50mil this later year on rebates and advertising i Hope the ads educate the public that ativo is far superior to cable generic dvr. until thenif that is what it takes to get subs up, is to partner with cable then so be it.. However getting tivo via dtv or cable you are getting a watereddown second party controlled tivo, they will dictate to tivoas far as future benefits are. Example DTV tivos cannot do home media option which is standard on stand alone tivo, this is a great feature.. it is likely that when the current tivo contract expires that directv will choose to have more than one supplier for DVRs. in the mean time, there is still plenty of time for tivo to continue moving a lot of units. i think its unlikely that directvwill drop tivo altogether, and the word of mouth on it is so strong, that i predict they will continue with brisk sales. especially if the competitors cannot be significantly less in price. and with tivos at $139 thisseems unlikely. ----From what I understand NDS is owned by News Corp., it seems to be a no brainer to drop TIVO. While I am quite fond of TIVO, I would not blame DirectTV to drop the "middle man" and make their own PVR's like Comcast, etc. are starting to do. If TIVO is dropped from DirectTV this would be very bad news for TIVO, especially since they seem to have made zero inroads with any other cable provider. The TiVo unit for DirecTV is lagging behind TiVo's software enhancements, namely their "Home Media Option". I have contacted both DTV and TiVo and they both point fingers at each other as to when they will roll this awesome enhancement out to the DirectTiVo user community. Actually, TiVo won't even talk about it they just point you to DTV. As I own a DirecTV TiVo unit (as well as multiple Ultimate TV units) I would like the TiVo "Home Media Option" made available to me. If it were I would purchase multiple DirecTV TiVo units. >>> Has anybody given any real thought to the fact that the cable and satellite industry currently controls over 75% of the market for the hottest hardware product of the future (the PVR) - one that both the PC and CE industries are desperately battling to control? I very much doubt that News Corp. will not want to keep this for itself as opposed to sharing it with TiVo. Yes, I am definitely worried about this since there is so much negative chatter in the media about TiVo's future. Subsequently, any such talk gets me a bit nervous about the service. It's certainly true that TiVo is dependant on DirecTV. I think it's unlikely that News Corp will drop Tivo in the near future, for a couple of reasons: * TiVo is the only real brand in the DVR area, and having that as a brand helps * TiVo has the proper experience for building good DVRs, and has recently released the HD version for DirecTV. Many people waiting to really go into HDTV because having a DVR is a more important factor than having HDTV. * News corp is using Tivo in their DVR advertising. On the other hand, many in the community were disappointed that the new HD Tivo was released with previous versions of the Tivo software. This may be because of DirecTV's concerns around IP, especially with an HD device. * 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? Investers perhap do, and I'm not sure whether I think Tivo has a long-term approach that supports its current valuation. On the other hand, I feel the same way about Amazon. Tivo needs to do a better job partnering with all cable providers, not just DirecTV. TiVo should be embedded in every cable box out there. - Tivo is a easy to use product. However I wouldn't lose any sleep if News Corp decided to use something else as long as there is an upgrade path. Otherwise there are many other sat/cable companies who would like to get me to subscribe. The DirectTV relationship is key to TiVo's growth in significant sub. numbers for the near term (2-3 years). Which is good, as that is about as long as I expect the relationship to remain monogamous. At some point around the two year mark, I expect DirectTV to begin rolling out NDS DVR functionality on ALL of their boxes. There will no longer be just a standard sat. tuner. I expect TiVo to still be an option, but as a percentage of DirectTV subs, they will be a very small one. Don't expect DirectTV to try and make current TiVo subs switch. You don't get rich by killing the goose that laid the golden egg. Especially since by that time, TiVo will have an OpenCable SA box out that will provide decent competition to the sat. industry. As soon as OpenCable becomes a significant reality, sat. will no longer be the driving force for sub. growth. At that point, cable customers will be the major push. As most domestic households still have cable vs. sat., the potential is much greater for TiVo in this arena. The trick is going to be providing your boxes at a low enough cost between now and then that even with the cablecos providing their DVR boxes at a loss, they can't take away too much market share. This is something the cablecos are doing right now to try and prevent people from leaving in droves for sat. or buying a dreaded TiVo box. The cablecos are taking a long time to come to the realization that Video On Demand is not in competition with DVR. They are actually complementary technologies. If they would only look at it that way, they could free up a TON of bandwidth right now, something they are desperate for to build an all-digital offering. In summary, don't expect DirectTV to drop TiVo in favor of NDS for the next two years. Also, don't expect TiVo to care much about it when it does happen, as their focus will be elsewhere. It's really a non-issue. Yes, I'm worried about that. But i'm very satisfied with my directv/tivo (particularly the 2-tuner feature) and as long as that continues to work (and they honor my lifetime subscription), I'm not sure why i should care how successful tivo is. I dont see how dropping Tivo for NDS is a smart strategy for News Corp. DirecTV might bring NDS products as part of an offering, but why exclude one for the other? Regardless, Tivo and DirecTV made relatively very little noise in the last few months by introducing the first HDTV Tivo unit (HR10-250). This unit is exclusively available for DirecTV customers. As a lucky owner of one of these units, I can attest that Ive seen the future of TV, and its simply HD with all of Tivos features. I am not concerned about Tivo's subsciber base, in fact while I was an early maven of this technology I have seriously curtailed that evangelism. Two things changes my mind in this regard, one, I started getting concerned that PVR were reaching critical mass and that the television studios and networks would attempt to find a way to bypass them. Similar to the copy protection circuit that the FCC has mandated for high-def signals. My thought process was that if I stop evangelizing then maybe they won't disturb the sleeping bear (Studios/Networks). The second reason I have stopped evangelizing is that Tivo stopped innovating. They had/have a great product but unfortunately you can't sit on you laurels in this business and that is exactly what they have done. They also tried charging for the Home Media option and while I have three units, I never saw the payoff for the technology especially considering that I would have to pay $100 for the option and then another $200 for the hardware (lan connections) to make it happen. Tivo squandered a golden opportunity to get their units hooked up via broadband so that they could become the digital media server for many users. M2: Suppose DirecTV does switch to NDS from TiVo...who is going to pay for the new box, or make the present box work on NDS. Users will not go backwards, or give up any tried and true capabilities. More likely that DirecTV will rebrand present hardware No, I’m not worried. It is an absolute necessity for Tivo to distance itself from any one specific cable or satellite provider. Not really. I do expect News Corp to start using NDS at some point. Either as a replacement for TiVo post-2007 or in parallel. I believe that they'll eventually put a DVR in every receiver, and for that they will probably prefer a bare bones in-house model from NDS over paying royalties to TiVo. But until NDS can provide a product with a comparable feature set, which will probably take some time judging by their overseas products, TiVo could play the role of a higher end solution. I do think it is a good idea for TiVo to pursue sales of stand alone units and more partnerships with consumer electronics vendors like Pioneer, Toshiba, and Humax. As well as pursuing a cable deal - though that will be less important as CableCARD rolls out. They probably will - Rupert Murdoch is known for squeezing suppliers to the bone. TiVo has significantly better ergonomics than wannabes like Scientific Atlanta who are likely to underbid, just to get a toehold in the market. Whether this will hurt TiVo (due to reduced distribution) or DirecTV (due to a less compelling service) is anybody's guess. I am worried about DirectTV and News Corp severing their relationship with TiVo. I currently have 5 TiVo boxes in my houseall connected to DTV. Including the latest HDTV TiVo the HR10-250. If thiswere to happen I am afraid it would be almost a death strike to TiVo and it would mean I would have to utilize and inferior product. This is going to be a huge problem for Tivo. Tivo is a tipping point product people dont see a use for it until after they have it. The harder it is to get, the less likely people will take it for a spin. Their relationship with Best Buy is great, but it isnt an effective place for people to get to understand what Tivo is. If I were them, Id incent existing Tivo users as evangelists to get their friends and families to pick up units. I am an avid Tivo owner and fan and agree with your comments regarding Tivo. How they did not become an industry force given their product and customer allegiance is a puzzle. I think both of these issues are really quite similar and related. I would suggest that the analogy is interesting but not accurate. Tivo has had some difficulty differentiating itself from cable PVR/DVR units. As a device I think the analogy is true, as a unique brand I would say it does not work. Tivo, in my opinion, needs to show the public why its software is superior. Cable runs commercials around the clock about the same functionality as Tivo, but without the same user experience. Tivo needs a campaign that basically says, "You tried the rest, now try the best." No, I am not worried. The DirecTV/TiVo combo units have several advantages over stand-alone units, including dual-tuners and much lower subscription fees. Answer: I think DirectTV is obviously preparing to drop Tivo once their contract expires in 2007. The frustrating part is that the market understands this, yet it keeps coming up over and over and over again. At some point the compnay should be cheap enough (their stock that is) that this risk is built into their price, but I'm not sure at what level we will see this develop. I'm less concerned about this risk though because I think that Tivo will eventually be able to sign agreements with Comcast and/or other operators, albeit at a reduce price from what they are charging today. As a user I am not concerned. As an investor I am concerned. I don't think that DTV will drop TiVo but it may add NDS as another option. However, I think an opencable TiVo will be the big news and OC TiVo subscriptions will eclipse subscriptions fron DTV. OC TiVo doesn't get enough media coverage. I don't have Direct TV service or DirecTiVo units, but I would be concerned if their relationship degenerates where TiVo loses out on that market share. I am not worried about DirectTV dropping Tivo in the near future. Tivo has an agreement to supply DirectTV through 2007 and based on comments made by both CEO's I do not see any change in the relationship in the near future. Both have publicly stated the relationship is strong and subsequently sold stock. If the relationship has deteriorated they would be in violation of security laws. Further, the relationship has been very beneficial to both companies. Tivo subsribers lead DirectTV's growth every quarter. As well, I have heard that any NDS dvr would be very, very basic and not offer the service/quality Tivo does. I am worried, and your statement seems to run contrary to what I had heard: That DirecTV dumped TiVo already. I'm especially worried because I have a DirecTiVo receiver/DVR combo box. 1) I have to admit that I am worried about the TiVo/DirectTV relationship especially because I have DirecTV with TiVo and I love it. I do believe that TiVo is dependent on this relationship but in the case that it is severed, I have faith the TiVo will adapt. As a DirecTV user, I will admit that if they drop TiVo, I will likely follow TiVo and not DirecTV. News corp: I'm VERY worried. I have cable now, but considered switching to DirecTV, as I'd save about $30 per month. However, the DirecTV TiVo software has not been significantly updated in several years, and they've shown no interest in the newer features such as Home Media Option (networking). I've been holding off switching in the hopes that this situation would sort itself out, but it's not looking good for TiVo. I think that DTV will operate two DVRs in their product line up. This is hinted to by their change of the product from "DirecTV Tivo" to "DirecTV DVR Service with Tivo". The NDS (or whoever) DVR will be a limited function device that will actually be a "hard disk VCR". The Tivo offering will be for those who want more functionality. And, I am skeptical about the strength of TiVo's relationship with DirecTV - I think that it would dump TiVo in a second if it could and will do so when it can. I've been a DirecTV subscriber for 6 years. I've been a DirecTiVo subscriber for 4 of those 6 years. I'm not just worried that the technology I've invested in might get replaced, I'm worried that it will be replaced with an inferior technology. The focus with NDS seems to be on access control and interactive TV, 2 things I couldn't care less about. TiVo is great because it focuses on functionality, doing something for users that other tools don't do. I just want to be able to quickly and easily get to something decent to watch on TV after I get home from a hard day. I want the programs my family enjoys to be recorded without fuss. Other technologies (like NDS) either don't do this or don't do it well. I do worry about the DTV deal. The Sky PVR (as used in Europe) is pretty poor compared to a TiVo, but it is better than no PVR. I fear DTV switching to the Sky device, and TiVo losing revenue and customer base as a result, leaving my hardware obsolete. However the consolation is that TiVo abandoned the UK market a couple of years ago but UK customers still get guide data etc, so their boxes continue to work, but they get no upgrades or new features. hh * 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? Yes this is bad news, with all the so called experts raving about the TIVO technology I am amazed that this product has not taken off. Sometimes I wonder if the technology scares the people off. You try to explain what tivo does and the common person gives you a blank stare. Eventually, all of us will be watching TV in a different way, and TiVo can take credit for getting us started. Unfortunately, TiVo's business model isn't protected by patents, and so the real revolution will be carried forward by others. Again, the future is licensing, and TiVo is working hard to address their losses by creating a better business model that pure subscription. The can pull it out of the fire with one or two major deals. Also, as penetration increases, TiVo can provide HUGELY more accurate and valuable information to the ratings companies than Nielsen could ever dream of. Most TiVo users wouldn't object to that information being compiled. The only one's who really hate TiVo, are the advertisers. Their perception is that most PVR owners are fast forwarding through the commercials, losing them money. In reality, studies show that TiVo users watch MORE commercials than most normal TV/Cable watchers, because they don't start flipping channels as soon as a commercial comes on. I'm extremely frustrated by this. By all rights, Tivo should be rolling in money. I couldn't live without mine, and have not met a user yet who has ever cancelled Tivo service once they start. I'm afraid that the product is difficult for them to market-- once people USE mine, they love it. But trying to explain why it's better than a VCR or a generic PVR to someone is like trying to teach a hamster calculus. Either I'm lousy explaining things, or it has to be seen to be understood. This is a volume business and they aren't large enough. Also, their home media option is crap. They either need to open the box and let others help build it into a decent home media server that includes games . . . or bow out. The only way I can see out of this hardware hole is through partnering with a Dish or Direct TV style partner or . . going for a Gateway (who may be interested given their consumer push) or a Dell (who are great fast followers). Tivo built a brand but their followup swing has always been lagging. Kleenex made more durable Kleenex, Jell-O has faster setting Jell-O. I think consumers/investors might want to know how much feet dragging has occured in the company &/or what hurdles w/ the FCC or media industries caused them to halt/slow. If you go back in avsforum.com's history you can see that Tivo representatives had a lot slated for future software releases. Very few if any of their spoken ideas have yet to come to market. Why? When dealing with something that is so easily publishable and after a good QA testing you'd think you'd see a faster Tivo software iteration cycle than what occurs. I'd also like to see TiVo follow up on its talks with Netflix; being able to download a movie on demand (real ON DEMAND) from Netflix would be awesome. I'd also like to see TiVo advertise more, which they will be doing with the aforementioned $50 million in the coming months. It's remarkable that millions of TiVo units are out there considering the only marketing they have is word of mouth. It is frustrating that a company can innovate and spend so much time and money building a brand only to be cannibalized by other entities. This happens to Apple Computer quite often. The only way to combat it is to stay one step ahead of your copycats. Unfortunately that takes huge stockpiles of cash and a bit of luck. Well, yes and no. They continue to make progress towards profitability, but TiVo's main problems have been the high cost of entry for the consumer (price of the PVR hardware), and more importantly, the difficulty in explaining the value of the product. Given the Moore's Law curves on the hardware, TiVo would have been better off inventing the whole PVR concept this year instead of in 1999. They were ahead of their time (as were ReplayTV and others). It is frustrating that they haven't been able to ramp up the consumer education so that everybody wants one... When I purchased units for my parents, I didn't even bother explaining all the features, I just set them up for them to record every show they watched, and now they couldn't imaging not having them. They call them the best present I've ever given them. Well, they have been dumb-asses in that they have not upgraded their features and software quickly enough, so I am not surprised that they are fading. They also should have been making more alliances more quickly. I mean, the XM alliance was announced months ago, but they should have had product out by that time, not just an announcement. Too slow. I have no emotional or ego investment in their survival - sure, theyve coined a word, but as long as I get the service I want, I dont even care if its called Microsoft DVR Service. Yes, Tivo = PVR for most people, yet Tivo hasn't really capitalized on this. They are going to face an extremely uphill battle maintaining an edge. Why? Cable companies like Comcast can easily use an existing customer relationship and upgrade the cable box hardware to do PVR. They are already starting to do this. If I am a Comcast cable subscriber and can get all of the great PVR functionality plus all of the video on demand features, why would I want to purchase an extra box, and pay another $13 a month bill. It would be far easier to just roll it all up into one package. Consumers like easy. Of course not. How else would they have *gotten* such great brand recognition? This kind of recognition is vital in an area where new players (mostly in the form of existing CE companies expanding their product offerings) are showing up every week. A strong investment at the beginning of the DVR surge will help TiVo a long way as more and more "novice-level" consumers think about buying one. ("But it's not a TiVo, is it?") This brand recognition will also help them as they expand into new areas that are already occupied by other established players (e.g.: their desire to start delivering featured content on-demand). it is understandable as it's a new technology being introduced to the consumer who has been held prisoner by their TV for decades. the prophet will come. Once the subscriber numbers are up higher the advertising dollars will be the revenue. there are so many possibilities. imagine watching my tivo and at the click of button i could be ordering pizza hut pizza, or while watching csi Miami i could click the hummer h2 for a brochure!! While Tivo may be well known, the difference is everybody has Kleenex and Jell-o in their homes. You can not say the same for Tivo. They desperately need more subscribers and need to develop a technology platform that allows their channel partners to profit from expanded services of which Tivo may share in the revenue. Definitely, in the next two years as other manufacturer's provide set top boxes with DVR functionality, Tivo's brand name awareness will be their main strong suit. Honestly, they seem to lead the field in product development; their latest features (internet scheduling, inter-tivo content sharing, streaming media from a local PC, etc) are often not found in competing DVRs, but they just seem to have a hard time managing their brand. Tivo is a pop culture vocabulary word regarding any encoding of TV on the fly. It does not matter what software/hardware you use, and there are many others now. It is sad to see this happening to them, but the word "Tivo" will be here long after this company disappears. Honestly I didn't know that, but I'm not too worried. Their problem (as I see it) is that they have become the Jell-O or Kleenex of DVRs. People toss around the word "TiVo" to mean a DVR, when they have never experienced one. The problem for TiVo is that they are so much more than just a DVR. The boxes work great, have a fantastic user interface that even my dad (who is notorious for not being good with technology) could use. I never feel like I'm fighting the TiVo or confused as to how to go about doing something. Some of the reports that I've heard of the other boxes (like Time Warner's or the Dish Network PVR) or my experience setting up my own PVR out of spare computer components, it pains me to hear such things referred to as "TiVos." Other than growing through ads (they should compare their UI to those of competitors in commercials) and with DirecTV's help, I think one MAJOR source of revenue that TiVo could tap into would be licensing their interface and technology and service to be put into the DVRs given out by cable companies, other satellite companies, in DVD recorders that also function as DVRs, etc. I would buy a DVR from my cable company if it used the TiVo software (and if they improved their service to something close to DirecTV, but that's not a TiVo issue). I should also mention that I hope things get BETTER once News Corp takes over DirecTV. While I like my DirecTV service, many in the TiVo community (judging from the forums) feel like DirecTiVo users are the unwanted stepchild of TiVo. Updates come to DirecTiVo users MUCH slower that normal TiVo users because DirecTV is in control. For example we still don't have version 4 of the TiVo software. This would include such things as HMO (which would obviously be controversial for DirecTV) to smaller things like folders to organize recorded programs in, and the ability to have TiVo get it's updates over the internet instead of having to dial in with a modem (this would both be faster for users, not require a phone line, and be cheaper for TiVo because they don't have to pay dial-up fees for all those TiVos calling home). Our service is nice, but it defiantly lags behind the stand alone users. And Apple? Very frustrated. One thing I know for certain - TiVo and Apple have the same problem. It is hard to explain to someone how great the product is. The product has to be used for a while. I've often wondered why TiVo doesn't try a 60-90 day money back guarantee. I've heard lots of dissatisfaction from people who have used/owned various DVR units but almost none from TiVo owners. In a sense, I think TiVo is doubly hurt when someone chooses an EchoStar DRV or a cable supplied DVR. First, TiVo loses the sale. Second the customer isn't thrilled with the DVR and thinks they all are like the inferior product. >>> Nothing new or strange here. TiVo has failed to execute properly. A rule that we apply with our clients to explain this situation is "The overall use of a system is directly proportional to the ease-of-use of this system". Note that I use the word 'system' and not product or hardware. TiVo has an incredibly simple to use product but its overall system is not. their strategy has been to focus on gaining a strong (read large) base of users. they are investing a large amount this year on marketing activities to further increase the rate of adoption.their forecast calls for double to 2.7 million users.w/o this, they could be profitable this year; but loose market momentum. furthermore, they predict positive cash flow by 2005. no, it does not bother me at all. they look like they have have plenty of money in the bank to get over the hump That does sound bad on the surface, but it depends on why it is losing money. Is it overspending for development? There is a chance that a competitor will arise, and it behooves TiVo to stay ahead of the curve. I imagine their main competition would be the next gen X-Box and Playstation, which may have PVR functions. They have announced this functionality. HDTV is not going to be critical until 2006. Xbox already supports HDTV for gameplay . . . if the next version includes PVR at HDTV it will hasten Tivo's demise. Bottom line, they need it standard (with much larger disks) within 8 - 12 months. ---TIVO has not done enough marketing or consumer education. I rave and rave endlessly about my TIVO, but still I get that blank look from people who always say "but I have a VCR that does that". Hell what good am I against some expensive marketing firm that TIVO should be paying to disseminate the word. The TIVO concept is a revolutionary step forward, but the TIVO company does not have the gas to propel it forward. Smart marketing points to giving customers small bites, such as the "On Demand" system from Comcast which is not a full blown PVR, rather a selective programming PVR which is free of charge. Comcast customers may well be hooked and ask the question "Can I do On Demand with ALL of my programming?" Which is where Comcast steps in with their $7/month PVR feature. TIVO certainly has an uphill road marketing, and it is their own fault for resting on their laurels early on. I would argue that TIVO has built a brand name synonymous with such huge companies as Kleenex or Jell-o, certainly none of my family, friends, patients, or near strangers has ever heard of TIVO. Umm... TiVos are just specialized computers, and general economies of scale will continue to drive down the price of the unit over time. Without knowing the economy of scale that TiVo has or the general reduction in price of computer components, I think it's hard to know which direction the trend is going. I do think that TiVo will likely have a model that is similar to video game consoles, especially since people who get over the purchase price barrier tend to turn into such TiVo fanatics. I don't understand how this happened, but it IS frustrating. As anyone that owns a TiVo will tell you, its hard to imagine watching TV any other way. Having said this, they haven't made it terribly easy and affordable until recently to be a TiVo subscriber. TiVo losing money: I'm not concerned. TiVo's burn rate is still very low compared to the size of the company. Compared to the size of the market they are poised to capture a significant portion of, it's infinitesimal. TiVo has been forced to drop prices on hardware significantly (and recently monthly fees as well) to compete with the cablecos. While this is a short-term setback to their profitability as a company, in the long-run they will be in MUCH better shape to take advantage of the huge DVR push that I anticipate in the two-year timeframe. The viral marketing ability will be that much stronger. TiVo customers are a fanatical bunch. They convert their friends, their parents, and even total strangers. Once you've experienced TiVo, you don't ever want to try anything else. The truth is that the cablecos can't keep providing their boxes at these huge losses either. The business model just doesn't work. It takes too long to pay off the initial hardware investment at the $7/month rental fee they are currently charging, especially when one considers that the DVR now contains a hard drive that has a much lower MTBF than solid-state electronics. Consequently, the DVR units won't last as long and can't be recycled as much as the traditional STB can under the current digital cable business model. The cablecos are destined to either charge for the DVR boxes themselves (ala DirecTV's DVR offering) or increase monthly sub fees to compensate. An obvious ploy would be to increase monthly fees for all customers and then provide DVR services for next to nothing to everyone. The problem with this scenario is that they can't increase the monthly fee or they will add fuel to the mass exodus of customers to satellite service. In addition, there are anti-trust and other legal considerations (the OpenCable requirement) with trying to shut TiVo out of their customer's houses. Expect the cablecos to start charging a flat rate for their DVR boxes in addition to a monthly fee for the OpenCable card that will shortly be required. Don't expect that to happen until they have a reasonably decent TiVo competitor product on the market. The current first generation models are terrible in comparison, and couldn't stand up to true price competition. In summary, I believe TiVo will not only be profitable by next fiscal year, they will be enormously profitable the following fiscal year. The only thing I am truly afraid of is TiVo being acquired by an eight hundred pound gorilla prior to that occurring. I'm frustrated with the lack of concern for its customers that the consumer electronics and entertainment industries have. With the possible exception of the last generation nokia phones, I think tivo has the best user interface of any consumer electronics device that i've ever used. But nobody wants to license it and promote it. I don't understand why. Probably because the cable and broadcast networks are afraid of losing control of their customers. I am surprised. But I think it is due to the exclusive contract above. I couldn't care less, except to say that I would be pissed if they went out of business. In my mind they have made so many mistakes on the business side that they almost deserve to go out of business. This is not relevant and you are recycling thoughts of other journalist looking for an angle. ☺ They don’t need to make a profit until quarters from now. The primary concern for them is building a foundation for which they can build other services on top of….. services that will be announced shortly. In order to do this, they need to expand their reach in terms of unique eyeballs. Need to look at why...subscription fees simply must not be paying the operating costs; or there is high churn; or they are locked into high fees for the services. Seems simple enough..the system does work. Not at all. They've narrowed losses and have been spending money to develop new products, establish partnerships, and gain market share. They only get one chance at building a beachhead before the wave of cheap DVR knock-offs rolls in. They have to establish a solid user base and brand before that happens - and it is starting. I've used the Scientific Atlanta Explorer 8000 cable box DVR - it is a complete piece of junk. You couldn't pay me to use it instead of TiVo - it can't do MOST of what I do daily with my TiVo, so it is worthless to me. But it is cheap to rent and has no up-front cost, so people who don't know better use it. It is better than a VCR, but barely. They are losing money mostly due to their high marketing expenses. Given how ineffective their marketing has been (even though anybody who has used a TiVo "gets it" within half an hour and usually becomes a rabid evangelist), they would be better off axing the marketing budget altogether, firing their incompetent marketers and rely entirely on word-of-mouth. I am not sure why TiVo continues to lose money. There is still a great deal of development and R&D occurring, however the big hurdles seem to have be passed.TiVo has become a verb as well as a brand, somehow they just haven't capitalized on it yet. Frustrated that Im paying $13 bucks a month for all three of my Tivos for programming information. People don't like to pay for hardware anymore. Look at satellite and cell phones. This is no surprise. Perhaps they should have they should have a scaleable pricing system to help introduce the high end models into the home. Even better would be to get out of the hardware business and rely worry about the software end of things. This perplexes me. Once you have had a TiVo, you will wonder how you ever got by without one. I tell people that "TiVo will change your life"! Answer: According to their last conference call, they plan on being profitable in early 2005. If the company redirected their efforts to cost control instead of research and marketing, I believe that they could be profitable today, but personally, I would rather see them continue to try and capture new subscribers while the industry is maturing. The brand recognition will help their marketing efforts, but they need to better differentiat Tivo service from PVR service. Cable DVRs have a captive audience. That will change with OC TiVos. TiVo has done remarkably well for a company that doesn't advertise. I am not frustrated because of the strong sub. growth and loyalty they have developed. They are growing subs very quickly, with lowered prices we should see explosive growth though the remainder of the year highlighted by the holiday season which is just before TIVO's fiscal year-end. I wouldn't say frustrated. Disappointed maybe, and concerned as to why. Then again, there's SO much more market out there that isn't tapped yet. DVR will be the way everyone goes at some point -- the question really is, will it be TiVo? Obviously, as the market blows open and gains widespread acceptance, TiVo will have other competition. So far, nothing else compares, but that won't always be true, if some big name players decide to get involved. I recognize that we were early-wave adopters, but I am glad that we were because we've had 4 years and counting of a great product. As a TiVo shareholder I worry a great deal that they continue to lose money, yet have established themselves as the clear leader in the marketplace and a great brand awareness. Seriously. Everyone I know who has a TiVo (or any other DVR) loves it and recommends it to everyone they find. I certainly don't see how I could do without it at this point. Plus there are no 'ReplayTV hacks' books out there. Me and my S.O. love the 30-second skip hack, and there are barrels of people out there tweaking their TiVos like mad. Wall Street seems really out of touch. They love satellite radio, but no one I know has that and looking at the station choices... yeeech. But a quality product like TiVo, obviously that needs to be shorted. Frustrated? Yes. Concerned? Yes, but less so. Amazon.com lost money for eons, yet it survived and is doing fairly nicely, all while maintaining a focus on the customer of which most other firms should be envious (or at least studious). 2) I am very frustrated that TiVo has lost money for eight straight quarters. Tivo is clearly a household name and even doubles as a noun and a verb. It is even part of popular culture. I am reminded of a few clever Sex in the City episodes where TiVo featured very prominently! Despite my frustration I believe strongly that TiVos place in the business future is secured not only by its wonderful product but also by its name being synonymous with its product. Nah. I spent 12 years with AOL. Losing money is something you do in a new industry. Hell, even after we did start making a profit we had to restate it, losing every penny of profit we'd ever made. I think Tivo needs to get out of the hardware business entirely. They are a software company at the core and they need to focus on that. Seriously. Everyone I know who has a TiVo (or any other DVR) loves it and recommends it to everyone they find. I certainly don't see how I could do without it at this point. Plus there are no 'ReplayTV hacks' books out there. Me and my S.O. love the 30-second skip hack, and there are barrels of people out there tweaking their TiVos like mad. Wall Street seems really out of touch. They love satellite radio, but no one I know has that and looking at the station choices... yeeech. But a quality product like TiVo, obviously that needs to be shorted. I have owned a TiVo for 2-3 years now and am a huge fan of the product and services that TiVo provides. That said, I would not invest in the company. In the first place, I am very concerned that the company has lost money for 8 straight quarters. I wonder how that is possible. By now, Tivo's name is the gold standard for DVRs and has - it seems to me - limited overhead. It does not have major product diversity so it can focus on efficiency with respect to production of units. It's program guide info feeds have to be compiled for every market in a daily basis, but I have to imagine that there is an easy automated service for this. With such a focused product and developed name/reputation, I think that the company just has to be mis-managed in order to still be losing money. Absolutely. They are wasting an opportunity. TiVo execs don't seem to know how to take the most important entertainment device to come along since the radio and the TV themselves and market it effectively. DirecTV has saved TiVo's butt. he * 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." HDTV is very important. This is going to be the next wave. I have already read where the cable companies will be coming out with a tivo like device built into their set top boxes. It is in trial in certain states now and will be coming out by the end of this year. If tivo is frozen out by the cable companies they will lose immense market share. This is a tough one. Part of me says they should just be charging more per unit, but I'm sure they need the subscriber base. Why isn't the hardware getting cheaper for them to build? Why isn't there a "Series 3" Tivo that further consolidates components on the mainboard for more efficient manufacturing? Or a version that ditches the hard drive altogether and uses a shared drive on a home network for storage? Or a cheap add-on PCI card for home computers bundled with Tivo's superb interface? The TiVo hardware is a "Software Delivery Vehicle", nothing more. If they can break even on the hardware, to me that's fine. They need to keep lowering the entry price for the consumer to help build the subscriber base. Very similar to the cell phone model - give away the phone, sell the minutes. Difference with TiVo is that the subscription fee is flat (no big bill surprises), and very few people hate paying for TiVo once they have it. Well, the units could have sold for more if they had added real networking and software features like the ability to transfer digital files across the network. Also, the media center is too basic. It cant use playlists from most of the PC media players, and its display options are very limited. This is my main beef w/ the TIVO. And for those reasons, they have not been able to command a higher price - mediocre feature set. <>They're selling a service, not hardware. The hardware is the loss leader. It's like cell phones -- carriers sell them at a loss, to get you signed up for their services for one or two years. The money WAS in the hardware, at one point, but now, the expansion from other market players is requiring them to leverage their OS and their services through partnerships. tivo is software company, they need to do both a first, but now humax will have 3 tivo units, pioneer Toshibaand I'm sure more to come. I've worked in several hardware and software companies. TiVo has chosen a difficuly market - consumer goods. Margins are low, price is a huge pressure on the designers, and the high volumes demand that you offshore your production. All of these are hard things for any company to manage, let alone a startup. The mitigating effects of a subscription-based revenue component may not be enough to keep TiVo afloat. Like the above question, Tivo simply needs more subscribers and an expanded technology platform. For example satellite companies can push data downstream very quickly. They do not however have upstream capability generally. Since so many Tivo's are being networked in homes, they can build boxes for DirecTV that pushes commands upstream and the satellite can do the rest. Imagine video on demand using Tivo! Tivo sends your request and the movie streams at the speed of their download capability and your network speed. This doesn't surprise me at all. Tivo should look to licensing it's software. I'm definitely in the 'gadget hound' category, and I don't want a separate tivo box aside from my already necessary satellite receiver. To replicate the functionality of the HDTIVO DirecTV receiver I have now, I would need 4 separate set top boxes, and the remote control management nightmare that would create. As it is, I have an HDTIVO DirecTV and an regular Tivo DirecTV box in my living room, and that's confusing enough. TiVo really is a "razor blade" business, in that it's the subscription that makes them the money. As time goes on, things will get better and better as hard drive prices plummet, but I think breaking even or being near braking even would be fine for TiVo. Let the other TiVo manufacturers worry about making boxes at a profit (by that I mean Phillips, Sony, etc). TiVo was originally forced to make their own boxes because they were new. Now that DVRs are taking off, TiVo could easily move to being a software/service company and just license out hardware and software designs for others to actually assemble. The cost of making the TiVo drops as component costs drop and since TiVo doesn't have to refresh its models as fast as a computer company does, the initial hardware investment can probably be recouped pretty quickly. TiVo also has to fight off the relatively inexpensive computer add-on devices and competition with cable companies that are now offering DVRs. I'm not surprised TiVo's prices have dropped. I'm more surprised they haven't dropped faster. When it comes to making money, TiVo is between a rock and a hard place. TiVo sells a consumer product but it isn't like a stereo system. TiVo supplies hardware, software, and scheduling content. The three go hand in hand. For the content to be as reliable as possible, TiVo must license it from a reputable source and pass on those costs as well as the storage and transmission costs. The company must constantly update the software and provide new features to combat competition. TiVo doesn't have to refresh hardware as quickly as other consumer manufacturers but it does have to be done. So where does the profit come from? Until recently from selling hardware, but today other DVR products are available at very low cost. From selling the software? That would be an interesting idea - I'd love to install TiVo's software on a box of my own but I suspect I'm in the minority. Besides, TiVo isn't set up to deal with the problems of selling software to clueless customers. Selling the content? Not when the monthly service fee is also the biggest complaint that potential buyers mention. So where does the profit come from? Other services? A combination of services, content and hardware? It's my understanding the business model is one of making money from subscriptions. I have a first (very first) generation unit, and I have a lifetime subscription. Although the sub model makes sense financially, I think they'd sell a lot more units if they got rid of that, or if it was bundled with cable TV. To me, the next logical step is to make the box ubiquitous, and offer the service free to cable/satellite subscribers. Then, only broadcast folks would need a subscription, and it could be less, since there would be lest channels. ---I would not worry about losing money on hardware, this seems to be the Gillette model where the money is made on the razors/monthly fees. I would, and am worried more if they were not making money from their subscription fees. I would rather see the price of hardware drop to the point where consumers would buy the hardware with no qualms, and see the subscriptions increase, even at a loss in terms of the hardware costs. Hardware is a very, very tough business. Very slim margins. TiVo should consider going for mass volume and selling their top of the line units for $100 including 2 years subscription and/or concentrate on the software and hard drive and get their software into every DVD recorder, cable box, HDTV, computer,laptop- anything and everything! This is also not an issue. The profit on DVR will not be from the hardware. The profit on DVR technology, as far as TiVo is concerned, will be off of subscriber fees in the near-term. In the long-term, as TiVo becomes a mass market phenomenon, monthly fees will drop significantly, as profit will primarily be provided by licensing, advertising, market tracking (ala Nielson), and iVOD. iVOD being Internet Video On Demand. Expect delivery of content across the Internet to be a huge business for TiVo in the three to four year timeframe. Note that the cablecos will be getting a piece of this pie as well, as customers will need high-bandwidth Internet connections, currently only offered by cablemodem technology. I think the price of hardware will continue to drop, allowing the margin they can charge for their software to go up. I think they may have missed their window of oppurtunity as a hardware vendor. Their core tech audience can pretty much build their own now, and the broader consumer market is going to be served by the cable/satellite providers. - Hardware always has slim margins. They should of added more features like, TIVO to go. i.e. dockable portable player. Also it would help if there system would work with other vendors. Not sure that this is an apples to apples comparision. Are we sure that the cost to produce those units didn't go down by that exact same amount, or possibly more? The hardware that Tivo is using is a little behind the times, so I wouldn't be surprised. Again, the primary they TIVO as a company needs to be concerned about is getting NEW subscribers … and as many as possible as quickly as possible… Hardware is secondary. M2: Simple - all hardware is subsidized. They price to what the market will bear; selling price has no correlation to true hardware costs. That's expected, it is the same model as cell phones. My carrier loses money on me when I pick up a high end phone for peanuts - but they make it back and more when I pay for my service. I'd be surprised if TiVo hasn't made money on me. Over the years I've purchased 4 units, paid for lifetime on all of them, and Home Media Option on the three Series2 units. Even though I resell the older units when I upgrade, I have to believe TiVo made money on me. Especially since I use Ethernet and I don't use their dial in modem pool, which should reduce their costs of supporting me a bit. And in the long term I think they'll do OK. According to their most recent quarterly call 60-70% of new users opt for monthly service, which means an ongoing revenue stream. Welcome to the consumer electronics world, where DVD players went from $500 units to $39 Wal-Mart loss leaders in a mere two years... The boxes themselves are commodity items now, just like the low end computers they are based off of. Breaking even is the best that can be hoped for. Since they are now competing heavily against thecable DVR rental market, the buy-in has toas minimal as possible. Like cell phones, Tivo has to keep the cost of the units down. Once it hits a certain price point, it isnt something that you can just bring home from the store to try out. People are cheapskate; simple as that. Answer: Tivo doesn't sell hardware, they sell software. they will recover these losses from subscriptions and more importantly advertising revenue. In order to make significant money advertising they need to develop a mass audience that advertisers covet. When you look at the demographics for Tivo users, it's no surprise that companies like BMW are willing to pay more than Kia (or any discount manufacturer)is in order to reach Tivo users. Volume sales reduce hardware costs. Polaroid lost money on the cameras. Gillette loses money on razors. I've very surprised they don't make money on the hardware. The hardware prices don't seem exceedingly cheap -- we paid $400 for our first 30 hour unit. Of course, newer units are much less expensive, but one would assume scale economies and learning curves would have brought down manufacturing price. Tivo is a service. They have lowered prices to sell the service. Based on their revenue model, I think we will see profitabilty soon due to lowered unit prices and increased unit sales. Making money on the hardware is another concern, they dont seem to be as good at cost reduction as other companies are with products that have been in the market for a while. Most of the components in a TiVo should benefit from the continual cost reduction of PC components, but this doesnt seem to happen. Well, the feature set is about the same, so the price is going down. If they had some new tricks then more would be swayed to buy one. The other thing is that it is REALLY hard to buy one as a gift. My parents have Dish Network, and to get any sort of DVR for them involved some sort of Middle East peace process. Between the hardware, the installation, and the subscription, I ended up getting them a gift card that they spent on a DVD player instead. 3) I think the problem here is that the same hardware is being sold. I believe that TiVo should look for ways to upgrade their hardware increase space and add new options and frills. This has been an ongoing problem.. series 1 TiVos actually COST the company money for every new subscriber. Series 2 at least break even, I believe, but it sounds like there's no profit there... they also can't seem to hang onto hardware partners/licensees. I think Tivo needs to get out of the hardware business entirely. They are a software company at the core and they need to focus on that. Well, the feature set is about the same, so the price is going down. If they had some new tricks then more would be swayed to buy one. The other thing is that it is REALLY hard to buy one as a gift. My parents have Dish Network, and to get any sort of DVR for them involved some sort of Middle East peace process. Between the hardware, the installation, and the subscription, I ended up getting them a gift card that they spent on a DVD player instead. Why do they continue to try? The power is in the software, not the hardware. One of the reasons people are hesitant to adopt the technology is price. Why not license the TiVo software to 3rd parties and let the hardware prices come down. Everybody wins. * How soon do you think TiVo will sell a hardware unit that records HDTV programs? Is HDTV important? I think this is great but it is getting away from one thing that made there name - recording tv digitially. This product should have been the death knell for the vcr but somehow this has eluded them. They're already selling one. This seems fairly ill-informed to me. Although available in low numbers, it is already in the hands of users. The unit costs roughly $1000, and features two over-the-air HDTV tuners as well as two DirecTV tuners. A standalone (non-direcTV) HD unit will have to wait for cable companies to produce a digital cable standard. Currently the differing standards prevent the use of third-party hardware to record from the cable, and HD is too high-bandwidth after decompression to be handled by an analog recapture. (similar to how a non-HD tivo would work with a cable box. It's not impossible, but analog HD capture gear is VERY expensive right now.) This is interesting. I am on broadband and watching trailers for on the Tivo is 100x better than on my PC. They should have all trailers (similar to Apples website) available ASAP. I would expect the studios to pay them for that. Bottom-line, they should get fees from the distributors to begin this cycle and then work from there. Lots of content distributors would pay to get the Tivo customer for a few minutes. The feedback the box collects is unsurpassed. Well, since I have one sitting in my living room, I think it's safe to say they already make one! I pre-ordered the HR10-250 back in January, and was one of the first 100 folks to actually get one. So I obviously think HDTV is very important to the PVR market. The main reason is that HDTV programming, while available, is still a very small percentage ofthe total programming available. Before I had my HD-TiVo, I couldn't be guaranteed of having "something cool in HDTV" to show people, unless they happened to be at home during certain prime time hours. The point is that while I had an HDTV receiver for a year prior to my HD-TiVo, I rarely watched shows in HDTV, because I hardly ever watched live TV (since I had a TiVo). And once you adapt to the PVR habit, it's very difficult to go back. So I believe for the masses, having the ability to use a PVR with HDTV will be a key to increasing the adoption of HDTV viewing, and increasing the revenue generated by cable/sat companies in HDTV service. HDNet is a perfect example. I hated paying the $11/month for the DirecTV HDTV tier (all whopping 4 channels) before the HD-TiVo, because it was rare that something was on when I wanted to watch it. But with the HD-TiVo, I record HDNet shows all the time, at all hours of the day. What's especially interesting is that if everyone has a PVR, then prime time doesn't matter for non-event programming. Heck, I prefer it when HBo/HDNet show great content in the middle of the night, since I know my TiVo will record it for me, and there's less chance of a recording conflict with prime-time network shows. Now, when people come over to my house and want to see "something in HDTV" (since I have a large DLP set, these shots can look very impressive), I simply select something on the TiVo and blow them away. (I actually tend to keep *something* impressive on the disk at all times, 'cause this happens quite frequently - my current selection is a fireworks documentary from DiscoveryHD). TiVo shouldn't be selling hardware. It should be licensing services and its top-rate "user experience" rather than PVR boxes. The guts of a PVR are entirely commodity parts; it's the software and various service enhancements that differentiate the TiVo experience from other PVRs. TiVo just "works better," not because it has better hardware, but because the user interface is so exquisitely designed and the software is so robust. TiVo DOES sell HDTV units. They are DirecTV combo units, and are capable of recording 2 programs at once either off DirecTV or over the air off an antenna. They can both be HD, one HD one SD, or both SD. They are the TiVo units to dream over. As more and more people get HDTV sets, HD TiVos will become more important. But right now for many people to get the benefit of an HD TiVo, they would also have to buy a HDTV set which (together with the TiVo) is not cheap. Over time as more people have HDTV sets, demand will outpace the SD units. For now, I think they are doing fine. HDTV is becoming very important I think. But I'm staggered by the hard drive size required! And will compressing that much data require a more powerful computer? And what about tuner costs? This puppy sounds expensive to me. >>> Within the context of Digital Entertainment Convergence I don't think that HDTV is an overwhelmingly important factor. On the other hand, the adoption of HDTV can help stimulate demand for PVR's in general as people will often consider purchasing such an 'add-on' for a few hundred dollars when they're already spending in the thousands for HDTV sets. its available now. a friend of mine just installed his and said he loves it. i feel HDTV is only marginally important. among tivo users there are many early-adopter types and audio/video-philes; so it is important for that small group. overall, i don't think it will have any real impact on sales. its all about the unit volume which is at the lower price points don't find HDTV that important. And since the TiVo compresses video (even at best quality) it would seem counter to the product. If TiVo were to have an HDTV product, it should be priced on the order of other HD hardware, and be no compromises video, otherwise there would be no point. Such a unit might be $5000, so no, I don't think it's a priority. ---TIVO has dropped the ball in a big way with their lack of HDTV. If you walk into any electronic store the huge buzz word is HDTV. You cannot escape it on TV, the news, the stores, the articles. Let me tell you from personal experience their is nothing more frustrating than buying that beautiful big screen HDTV and hooking it up at home and realizing your picture will not look great after all because the TIVO is the weak link in the video path. Certainly the hardware is prohibitive, especially since HDTV takes a lot of hard drive space, but that is a subsidy TIVO needs to make, or it will break them. The lack of HDTV options from TIVO is simply unacceptable and I believe will be the last straw that breaks the camels back. You can be sure the cable companies will not make the same mistake. It already does for DirecTV. It's no about technology, it's about partnerships. To play in this area, Tivo would need to partner with a cable company that both wanted to enable DVR on their system (not all do) and wanted the TiVo brand. Cable companies and hardware suppliers have a pretty poor record in being able to come out with a really useful device in the consumer space - if you look at current cable boxes, most of them are barely usable. * 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? As you well know, TiVo already has a unit that will do HD, but it is only available through DirectTV. Don't expect to see a reasonably-priced SA HDTiVo until OpenCable becomes a significant reality. HDTV reception is still too spotty, and HDTV owners still too few to dedicate a lot of effort to this market space. It is still a very immature market. We might see an SA HDTiVo by the end of the year, but it will be too expensive to sell many units and will exist almost purely for marketing potential. As I mentioned above, the HD-Tivo already out, but with little fanfare from DirecTV and Tivo. The rumored reason was that initial manufacturing units were limited in number. HDTV is becoming more and more mainstream. Everyone Ive talked to regarding HD and Tivo are surprised that there existing Tivos wont record HD programming. Im just as surprised with their reaction that it wont work knowing the technical requirements to record a HD program. As more and more large TVs are sold, the demand for a HD-Tivo grows right with it. God I hope soon. I have been waiting for a long time for this. I simply do not watch television in real time and really look forward to them releasing it. I hear that the new Hughes unit will be available in July. I am not so sure now. If it can be converted into a good 480p version then it should be ok. 30+ hours is a must for HD. At 720p I think it is only a few hours. M2: Duh!?!? Already available from select resellers as Hughes HR10-250 for DirecTV and OTA Digital broadcasts; many many reviews available online; use google. You mean other than the DirecTV HDTV receiver with TiVo that is already on the market? HDTV doesn't make sense unless you can record digital cable HDTV. A unit that only records OTA ATSC HDTV is almost worthless since the number of channels will always be extremely limited. Compressing HDTV in a unit is impractical due to the cost of the required hardware, so a system that had component input to receive the output from an external tuner isn't viable. The only real solution, and the only really sensible one from an engineering standpoint, is recording the digital HDTV stream as is. To date that's been all but impossible for cable as the digital cable systems were incompatible and required using the cable company's HDTV tuner. But that's changing with the FCC mandated roll-out of CableCARD. With that TiVo will be able to build systems that natively tune and record digital cable, including HDTV signals. This would work very much like the DirecTiVo units today. In the most recent call there were strong hints that TiVo is working on such a product. They were asked about a digital ready cable box - "Obviously we've not announced any plans. It is a very interesting place for us to look and we have spent quite a bit of time in this area. I think in the future we are certainly considering cable ready products although the state of the art in that space is still somewhat in flux. But I think we're getting pretty close to the point where its real, there's the FCC mandate, and its embraced by principally television companies, companies who make televisions today, but I think its a natural extension to think of that capability being available in a TiVo-like environment. We're not ready to make any announcements of anything we're doing there, but you should know that it is an area that we're looking at pretty closely." There have been other hints from TiVo employees that they're working in this space, and TiVo participated in the comment period on the FCC ruling that mandated CableCARD and has comments included in the ruling relating to DVRs. I'd be surprised if TiVo doesn't produce something that supports CableCARD before the first half of 2005 is over. Last fall I thought maybe in time for the holiday season this year, but I think that's overly optimistic. It is, but HDTV won't be what drives TiVo adoption. Also, the broadcast flag mandated by the FCC is likely to crimp the usefulness of HDTiVo. They do already. It is the HR10-250 from DirectTV. Now if you are asking when they will be selling a standalone unit that only works with off-air ATSC, that is probably a year away. TiVo's best chance is to develop a CableCard compatible device that works with the newer TVs coming out. This will allow them to tap both the cable and HD market and lower some hardware costs. HDTV is important in so much that currently that is a portion of the market willing to spend on electronics. This will gradually change however. Absolutely critical. All of the major content providers (Comcast, DirecTV) will come out with boxes that have these features. If Tivo doesnt want to be considered as has-been, they need to have these features. The content providers will be pushing HDTV to drive more revenue if Tivo is the only kid on the block that doesnt support it, who would buy it? I understand that Tivo has sold some HDTV units, but I havent seen them in stores. It is critical to their success. Some suggest they have already lost the HD battle but I suspect they are waiting for more interest from their customer base. What I have seen about Tivo HD has not be as positive as the competition. My issue and the issue that I believe will sink this company is HDTV. Specifically, HDTV via cable. Most potential customers get their TV via cable. You know the future of TV is HDTV and HDTV via cable at that. So, why the F doesn't TIVO have any solution for HDTV via cable? Mike what's hisname can spin it any way he likes but his company is going down the tubes without a HDTV cable solution. The DirecTV deal could have kept them afloat for a few years but now Rupert has tossed them under the bus. The cable companies are going to clean TIVO's clock. No need to buy the hardware that soon becomes obsolete. Just add a few bucks to you monthly cable bill and when the technology improves, Comcast/TimeWarner/Cox/etc will deliver the shiny new hardware to your livingroom at no extra charge and take the old one away. TIVO wants you to buy the new box and pay for a new subscription. Hmmm, which option do you think people will choose? Of course if you listen to the TIVO rumpswabs, no DVR could possible match TIVO for features and reliability. To listen to them, a DVR is on a par with mapping the human genome in complexity and no other company in the world is capable of producing a viable product. That's just crap. It's only software and the cable companies are spending millions of dollars developing it as I type this. I have been waiting to upgrade my home entertainment system to HDTV for the last 2 years. I will not do so until I have a DVR that supports HDTV. I won't give up my TIVO but waiting and watching the silly business decisions (HMO, downloaded content??) has pissed me off. Earth to TIVO!!! I am the customer you need to stay in business!!! Comprende??? I get my TV via cable, I'm open to new technolgies and gadgets and I have money to spend. All that adds up to a new HDTV on the horizon for me. I'd love to include a TIVO in my new entertainment system but you nitwits have squandered valuable development resources on things like the HMO option. WTF are you thinking?? Do you think middle america is buying TV's so they can pull up a couple of digital photos on them??? Holy christ, what morons. Comcast is supposed to be just a few months away from deploying HDTV DVR's where I live. After years of waiting, I'll finally be buying that HDTV and dumping my TIVO. I've posted to alt.video.ptv.tivo that someday a Bloomberg analyst will be on the air evaluating a new technology company and he'll say something like: "Good company, great product but they have to be careful they don't get TIVO'd". It reminds me of the movie Kingpin where Woody Harrelson's character's name ends up being synonymous with screwups. That's the future of TIVO if you ask me. I could also give you my opinion on all the questions you listed if you're interested but as you can see, I believe the HDTV via cable thing is the main issue for TIVO as a company. Sean Duggan Chelsea, Ma Answer: HDTV is a very important part aspect to the PVR. They currently have an HDTV unit out via Directv. Stand alone HDTV is expected to come out later this year or early next year. The company has consistently been about a year ahead of the industry, although this hasn't necessarily translated into sales. (in other words HDTV is going to be important going ahead, but their beating Microsoft and other vendors to this feature, may not be as important to the company's success as it is to me personally.) I think they will sell an OC HD cable TiVo within a year. HDTV hasn't made it into everyone's home yet (it's not in ours), but I would think within the next 2 years they better have addressed the capability. I have no idea if they are working on such, but I would assume they are. These are already available. TiVo have been selling HDTV devices for a couple of months now (see my web site for my review). HDTV isnt terribly important now, but I believe it will be. Widescreen TVs are (at last) becoming more popular, and that combined with the higher quality picture that consumers see from DVDs raisings the average Joe's expecations with regular TV. They wonder why their TV picture looks and sounds like crap compared to DVD, and HD is the solution to that. It will take time though. I'm sure it will be not too far off. I'll probably see those before I see an actual HDTV program. Probably soon its not important to me though. It's on shelves now, I believe. HDTV has been in my peripheral vision for a few years, and the programming is finally getting here, but until all the copy-protection schemes get sorted out I'm not committing my money to any hardware at all. I almost bought a Mitsubishi a few years ago with their "Mitsubishi promise" to provide me with the support for final version of any copy protection/transmission standard... as long as it's Firewire. Good thing I didn't fall for that. They already do. It's $999 right now, but it's there. t I'm sure it will be not too far off. I'll probably see those before I see an actual HDTV program HDTV is important. The lack of a DirecTiVo that supports HDTV is a major reason I'm waiting to adopt HDTV. Price is another reason of course. h * 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? The Internet move is an act of desperation. Their short-term outlook is foggy, so they're hoping to catch the next big thing. The service really has little appeal when on-demand programming is available on cable. As for downloading it, and watching it later, cable can handle that easily as well. Plus, if you want to expand the library of available titles, there's plenty of "unused" bandwidth between 2 am and 6 am, and on the smaller cable channels. TiVo users are already used to "ordering" programs in advance. This is a different path to the same goal that Microsoft and a few other tech companies are striving for. The marriage of the media "sources". The Internet, to them, is but another media source. Microsoft, of course, would like the Media Center version of XP to be at the center of that confluence. TiVo is better suited for that market, as its interface is simple, robust enough to handle audio and video, and doesn't carry the onus of a platform that is vulnerable to hacker attacks. Will it make a profit? This will depend upon what the services are (say, access to iTunes, Real, et. al; or perhaps the integrated information for what you are viewing, say access to IMDB while watching a movie, and then immediately connecting to a NetFlix style of service to rent other DVDs with the same actors or directors) I think it's the future of video distribution. There are simply too many restrictions on the airwaves to make them a viable very-long-term distribution mechanism given the continued splintering of television viewers. With broadband-based video delivery, there is no need for a provider to pick and choose its list of available channels based on how many satellites they have in the air or how good their cable infrastructure is. It also opens the door to countless new business models that are more sensitive to consumer demand than the mass broadcast advertising-based model. Whether TiVo will be the company to crack open the market, I don't know, but they're in a better position to do it than just about anyone else. Excellent. The TiVo/PVR concept of "near video on demand" fits into the normal usage model of television time shifting, so I believe this concept will be a natural extension to the product. If I could browse through a list of shows/events/movies/whatever for TiVo to "record" (meaning download), that feels just like browsing the channel guide today. Do I want it right this minute? Well, maybe, but since I'm caching the content locally, the PPV experience is different. I'm selecting something that I will watch, on my schedule, sometime in the near future. Unlike PPV, which is "watch right this second, but only right now". I essentially do the same thing today with TiVo Showcases and/or the program guide. I'll look forward in the guide on HBO or Showtime for interesting content coming up in the next two weeks. If I see something, I tell TiVo to record it. It would be nice to surf on the TV, no doubt about it - but my computer can do that. However, what I really want it to do is * Provide a nice interface for playing music (CDs are a thing of the past) * Allow me to save programs in digital form to my networked computer, for DVD recording later * Record FM radio talk shows (esp. NPR, which is on Sirius) for later listening - added bonus for giving me a mobile device to transfer these to so I can listen in my car. Curious. They're at a crossroads now, whereby increasing competition and a standardization of their basic features are forcing them to start aggressively looking for new means of revenue and growth. Unfortunately, on-demand programming content has rarely been a success, and when it does, it's typically at extremely low margins, because of how much the MPAA requires in licensing and "protection" against copyright infringement. Then again, the cable companies do a good job of making money from it, and I suspect this is their target audience : people who might otherwise order this content, but can now do it through their TiVo, instead of having to find that remote for their set-top cable box that they haven't used in a year and a half. One thing that concerns me is that the risk of copyright infringement is growing rapidly here, to the point where organizations like the MPAA and business-friendly Congress are going to start to notice, and not in the good way. TiVo may run the risk of becoming the poster child for this new business model, and could be forced to throw millions of dollars away just to lobby themselves back to safe ground. The whole Internet capture thing is, imo, worthless. Too much work, and I am backlogged enough with regular tv programs I haven't watched yet. I would never use a tv to buy things, either - I need to investigate my purchases a little more thoroughly than a Tivo remote control would allow. 2. Make the right relationships with content providers (having access to the discovery channel's library on demand would actually serve them as well as a movie database online) 3. When possible, include the best possible media available (HDTV transfers of movies, etc would net them a HUGE gain; currently there is a bottleneck in quality HDTV delivery) 4. Provide functions not available anywhere else in the living room (view your yahoo photo library on your tivo, interactive weather, build your own newspaper channel, Amazon ordering, Safeway direct ordering, etc) other than on a computer. 5. Make it an alternative to those who are considering deploying a home theater PC like from gateway, etc. Not sure...it all depends on how easy it is to use and how useful it turns out to be. There's so much opportunity just in time-shifting alone that I'm not sure TiVo needs to do this to reach a mass audience. In my opinion, TiVo should be more concerned with forging alliances that enable their core functionality to reach a broader audience than devising nifty enhancements that appeal to smaller and smaller fractions of their target market. While I applaud their desire to keep innovating, they may find themselves in the same situation as Xerox is, just a whole lot quicker and without the (modestly) sustaining patent base. Internet capture would be quite interesting. TiVo could leverage their boxes and service to turn TiVos into on-demand video delivery service as well as DVR, which would be quite nice. Not only that, but through such a service you get programs from channels like HBO that you might not subscribe to. Think about it. I don't want to pay (say) $10 a month for HBO. But with my TiVo I could get a season pass to "Six Feet Under" for $1 a month. HBO gets more money than they would otherwise (because I wouldn't subscribe), and I get more entertainment that I would (because I get to see "Six Feet Under"). You could also have "independent channels" that only have a handful of programs. Without having to take up space on a cable line, they could suddenly have their content available to many people across the country. This is one of those areas to watch in the future. It wouldn't be surprised if things ended up with people downloading all their shows off the internet instead of recording them off broadcast. The idea of "networks" would be gone. That'd be fine with me. But that's obviously at least 5-10 years in the future if it happens. I'll need to see lots more. Star's online service is a snorer as far as I'm concerned. Maybe Netflix will do it better. But hey, I'm seldom in so big a hurry to see a movie that I can't wait 2-3 days for Netflix to send me a movie. OTOH, the ability to record a show on one TiVo and watch it on another would be a winner. Currently having two TiVo units is almost worse than having none. >>> Absolutely, this is 100% the future of this business. However, it is unclear if TiVo will be the company ideally positioned to reap the rewards from this. i think they came up with this strategy from the very beginning. that was one of my first thoughts when i had mine back in 2000. directv, dish, and cable are all distributions alternatives to each other for tv programming. with the explosion in residential broadband, internet can be added to this list. i believe tivo has had plans for this from the very beginning, but they could not speak about this publicly because they do not want to appear as competition to their partners (directv) and potential partners (comcast, time-warner). there is a decades old industry built around programming particular shows at specific nights and times, there are not enough tivo owners out there yet to impact the ratings but the writing is clearly on the wall.with tivo, you can time-shift your viewing of shows, but you still need to wait for them to air to capture them. in an internet distribution model, why do you need to wait'till 9:00 PM thursday to get west wing? since we have cable companies competing in the phone business and phone companies competing in the tv-content-delivery business i think its likely that we will see a pairing of one ofthe latter with tivo. a few months back verizon announced an ambitious plan to roll out fiber into every home, and sbc announced a $4-6 billion dollar investment in infrastructure. this will allow them to leapfrog the cable companies on the amount of bandwidth into the home. so, if a "phone" company makes a deal for content like time-warner and comcast have, they could make the tivo their set-top box. think about it, they could load all the programs onto ftp serversand the tivo would overnight download the programs on your season past list as they become available. this does not even take into account the VOD possibilities (from a huge library) yes, this is exciting in that it is turning the whole industry upside down in their strategic thinking. think back to the days when windows 3.11 or 95 came out. no one recognized back then that control of the pc desktop would become a worldwide strategic asset. it is not so with tivo. everyone recognizes that PVRs are the wave of the future and that controlling that remote and that "desktop" will be potentially bigger than PCs (think advertising, interactive and otherwise, ecommerce, video rentals or VOD, audience measuring). that is why cable companies are not lining up to make deals with tivo. they are trying to figure out how to retain control and not be obsolete and interchangeable delivery mediums. companies can see the future of tv and they don't want tivo to control it. tivo announced their downloading feature (and a price reduction) a day after directv press-released that they were cashing out of tivo and their member oftivo's board of directors resigned. i think they wanted to keep this ace up their sleeve but they had to put out some "good" news to show that they canlive without directv and to keep their stock from taking too big ahit.as of today, the stock is up from that day's close Will this be a path to profit for TiVo? only if VOD hits big. somebody needs to create a big library and partner with tivo. i be they don't want to do that themselves. probably adult content can make a lot of money here. I doubt it. Most internet programs are of laughable quality, and inconsistent. A better choice is the focusing on creating a P2P system with some form of advertising to create the ultimate on-demand video experience. I have ideas for how to do that, by the way, if you're interested. ---Ho hum. Do people really want a "VCR" that can connect to the internet? Do people really want the hassle of configuring and maintaining this? In this world of blue screens and Microsoft are they really fooling themselves in believing that your average Jack and Jill will really want this? What they should do is release a "software TIVO" or a PC attachment which will allow this feature for the more PC-centric user. Although their media option was a very nice feature, it seems to be hampered by the slow transfer rates you get over wifi, even with a faster 802.11G network, and you know "wifi" is another of those buzz words that TIVO supports very very poorly (take a peek at their wifi compatibility list, or ask them why they refuse to enable USB 2.0 on their series 2 recorders when they know full well this holds a 802.11G connection from even half its speed. Just pure shortsightedness... This is a really big deal. TiVo already has all the "on demand" infrastructure to support the "buy now, view later" model. There are some bandwidth issues, but given that this would allow you to sell a TiVo service and do the new stuff as a "try it, you'll like it" approach, there is real potential here. If done properly, this will define narrowcasting. What if I could choose to download the best concert from my favorite band's last tour? Tricky, very tricky. Data on the internet is very different from TV shows and movies. The idea is good as long as the execution is good, but TiVo cannot expect to make any money from capturing programs and data from the internet. Users are loathe to pay for any kind of service related to finding content on the internet. that's what Google is for. Sure TiVo would make it automatic for you, but who remember Pointcast? This will end up being a huge business for TiVo in the long-run. It will open up an entirely new market segment. I'm very excited about the prospects of this technology. This is exactly the kind of thing the cablecos would never do if left to their own devices. This is mildly interesting to me. I am Netflix member and if Tivo can make it as easy as or hopefully easier, then I will subscribe/buy from them, if not, then I won't. I look forward to seeing their offering. This is going to be their killer app. I know in the past TIVO was talking to people at Radiance for the purpose of pushing “NETFLIX” content to the device. Since that time, they’ve acquired StrangeBerry. NetFlix individual is on the TIVO board of directors. Netflix, the company has already publicly stated they intend to deliver content digitally in the future. M2: boring; satellite has much more bandwidth available, and the internet stuff just looks bad on TV I think it is an exciting direction, and one I've been predicting for a couple of years. So I'm not surprised by it. I think it is an interesting way to do video on demand, and I think they could go in new avenues with e-commerce from the remote, etc. ---> I don't know if it'll be profitable, but I think it's an excellent direction. There's a potential whole new paradigm for getting video almost-on-demand from a variety of providers, over the internet. Including being able to subscribe to niche clubs and services which have videos you want, not necessarily just blockbuster items. Right now with p2p filesharing, end users have basically satisfied the need for 'video on demand' for more savvy computer users. You can go download and watch almost any episode of many many shows, within a few hours. That's amazing when you consider that even if a company were offering the service, based on past behavior it's likely it'd only be for a few shows they were heavily promoting at the moment, rather than a wide library of selection. I think this is something that is going to cost TiVo a lot of money to set up, but will not make TiVo any money. Basically, capturing programming from the internet will require a high speed internet connection. While this can be accomplished on the series 2 models, you need to set up a wireless network at home. Not a lot of people are savvy enough to set this up. Plus, it requires people to spend another $80.00 or so to buy the wireless equipment. Finally, if I want to watch a movie, I rather just get the DVD, which I can already receive at home through Netflix. So, I dont see that this service will do much to improve TiVo service. As a techie, I can't say. However, opening up the platform to allow techies to play downloaded DivX and AVI movies (as well as MP3s) on the TiVo would lock them into the "Gee-Whiz?" market. Most of TiVo's upper management are veterans of the failed Time-Warner Video-on-Demand pilot project in Orlando. TiVo was originally designed as a low-cost, low-infrastructure way of getting digital video on demand without the constraints that eventually doomed Orlando. Now that the technology has improved, thanks to advances in broadband, they have a shot at it. Get shows of the Internet is meaningless to me, being able to share them amongst TiVo's in one household would be amazing. This can be done to some extent on non-DTV boxes, it needs to be expanded upon. Shows from the internet can be a moderate revenue stream if they can get content providers to agree to it, a big if. It would allow TiVo users to call up old shows and movies if done right. If it is only last night's episode of Law & Order it won't be a big deal. Eh. Their past efforts with music have been a bust. Ill believe it when I see it. Don't care. Nothing on the Internet for me to get that excited about. There are two fundamental differences in using the net and watching tv. TV is passive and the Internet is proactive. I suppose for some people in certain circumstances, but this sounds like a bad idea. I would love to be able to control my TiVo over the Internet. Being able to send a recorded program to another room would be nice as well. Answer: Eventually, video on demand or everything on demand should replace PVRs, but I think that we are at least ten years away before we begin to see this. I think that as a long term goal, it will be important to migrate to a Everything on demand model, but in the near term, it doesn't really matter. Two and a half years ago Tivo was testing P2P (a version of EOD), but ultimately scrapped it because of litigation concerns. It would not surprise me to see them ultimately sign agreements with certain media companies (Fox, NBC, AOL, and other media companies that own TIVO stock) that will allow for P2P file sharing via Tivo's network of users, but again this may be a couple of years away. I probably wouldn't use it. Couldn't hurt though. It might be. I don't use the Internet in that fashion, so hard to comment on that particular usage. If there's a market, it should be pursued. This is very exciting and could be profitable especially if TIVO develops VOD. I think a Netflix relationship would be fantastic for both TIVO and Netflix and would not be surprised to see somethingcome to fruitionin the near future. (note: TIVO and Netflix share directors) I think that better networking/internet support (like Replay have already done) is the way forward, but TiVo seem overly cautious in this regard. I would subscribe to the Home Media Option in a flash, but it isnt offered to DirecTV TiVo users for some reason. I gave up waiting and bought a Roku to view my photos and play my MP3s via my TV. My Roku sits on top of my TiVo. I've heard so many storied about stuff like this. It is really well beyond the I'll-believe-it-when-I-see-it stage. Plus it'd depend heavily on content. If they pull it off it would be quite a coup. I think this strategy shows that TiVo is not ready to give up. One thing that TiVo has going for it is very user-friendly. If they were able to maintain that ease of use in capturing programs and data from the Internet I think it would be a lucrative path to profit. Eh. WebTV has always seemed like a solution in search of a problem. I didn't get excited when Microsoft did it, I didn't get excited when AOL did it, and I'm not excited that TiVo is doing it. Everyone has a PC. Certainly everyone in their market does. I'd rather see caller ID. It's a good idea that can only lead to profit. More functionality means more selling points. Right now those competing with Tivo are just trying to get the DVR part right. If Tivo can move forward and become the "digital media hub" that's been talked about for years and years it can become the dominant player. I've heard so many storied about stuff like this. It is really well beyond the I'll-believe-it-when-I-see-it stage. Plus it'd depend heavily on content. If they pull it off it would be quite a coup. I think that TiVo's home media option that they have been pushing now for months will be a bust. Who really needs to spend a bunch of extra money (hundreds of dollars) just to be able to program TiVo remotely and share recordings with other TiVo units in each subscriber's home? I am sure that TiVo hopes that this will be a new source of revenue, but I think that it is a dead loser. No. It's a lot of hype. It's a feature that nobody asked for. The content isn't out there to even make it useful. * 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? Right now, as I watch my TiVo (series one), there are many times that I will be watching something, and it will prompt me to go research information (home improvement products, etc), and then perhaps purchase that online. To combine the two, is a small step. All of it though, boils down to security. Will the system be secure enough to make those purchase without the possiblity of identity theft or fraud? Depends on the interface. HSN has been successful with their interface, which is not something that would work for the 'net crowd. If there were some TV-based combination of amazon, pricegrabber, and froogle, I would definitely be interested. I think it's the future of video distribution. There are simply too many restrictions on the airwaves to make them a viable very-long-term distribution mechanism given the continued splintering of television viewers. With broadband-based video delivery, there is no need for a provider to pick and choose its list of available channels based on how many satellites they have in the air or how good their cable infrastructure is. It also opens the door to countless new business models that are more sensitive to consumer demand than the mass broadcast advertising-based model. Whether TiVo will be the company to crack open the market, I don't know, but they're in a better position to do it than just about anyone else. Perhaps. I can see this working for entertainment-related products that could be demo'ed with a video clip (video games, DVDs, music products). I'm less convinced that people would want to "surf Amazon.com on their TV". This has been a critical fault with a lot of the interactive TV concepts, in my opinion. The television set is a one-to-many device, while the PC is a one-to-one experience. No one wants to sit on the couch while someone else surfs the internet. But they'll watch a movie together. And if a "buy it now" icon pops up during a show for something, a couple seconds of distraction while someone hits the remote control a few times to perform a transaction is proabaly ok. Especially with TiVo, since I know we wouldn't miss any of the show in the process. I see only a very small audience for this feature. People that buy while watching TV -- that's basically your Home Value Shopping network crowd. But I don't see them owning a TiVo for a few more years, so I suspect it will be a long time before this plan makes any money. I also see a risk in making this functionality too intrusive into the customer experience. There are already various showcases and advertisements on the TiVo main menu -- I've never known anyone to look at them, either. Not sure...it all depends on how easy it is to use and how useful it turns out to be. There's so much opportunity just in time-shifting alone that I'm not sure TiVo needs to do this to reach a mass audience. In my opinion, TiVo should be more concerned with forging alliances that enable their core functionality to reach a broader audience than devising nifty enhancements that appeal to smaller and smaller fractions of their target market. While I applaud their desire to keep innovating, they may find themselves in the same situation as Xerox is, just a whole lot quicker and without the (modestly) sustaining patent base. It would be very interesting to be able to see a commercial for something (a new video game perhaps) and be able to press a button to instantly order it and have it sent to my house. Maybe home-shopping network types would love it. Myself, I prefer to order things over the internet on my computer. I just don't see myself doing much shopping over TV. I've had this ability through DirecTV for about a year and I haven't used it yet. I do buy a great deal online though. Perhaps it would be more important if I didn't have a laptop and wireless broadband. Not a horrible idea, but remember that they have been trying that in Europe, with OpenTV for example, and it's not been as successful as one might hope. basically, people don't want to think while watching TV, so they don't lean towards buying. Maybe if they could show interest and then someone would call? I don't know, but I don't know if I would buy that way. ---Didn't Microsoft attempt this years ago? Do people really want to buy things over their TV in their living room? Possibly, but I dont think it will be the gospel. Their is a reason why malls still exist instead of living room PC's and warehouses. I think that few people who have a computer would want to do that. There could be synergy, however, for referrals - the tivo is pretty good at giving a great browsing experience, and I could think of looking at better pictures or video on the Tivo, and then buying off my computer. I don't think so. I use my laptop and keyboard to buy stuff online - Not some remote control in front of my TV. TiVo would have to allow its users to surf the web on the TV which would mean it has to be hooked up to a broadband connection. Mine isn't wired yet. Unsure how many are. Perhaps I have a limited imagination, but I don't think actually buying products from the remote is going to be a big revenue stream. However, getting directed advertising that a customer can then click on and "follow" as deep as they want to go will indeed be a big profit center for TiVo. Imagine seeing an advertisement for a new car and clicking on a 'More Info' button and being shown a full five minute visual brochure. As HDTV resolution becomes more common, you could even web-enable the TiVo and tap into a huge reservoir of online material. I believe this kind of marketing will be amazingly powerful. No. I think tivo needs to decide whether they're providing software, services or content. They can't compete with their customers (eg directv). - Nope. I would pay more for skipping the commercials. Hello?!?! See my comment about the Home Media Option above, Tivo cut off their nose to spite their face. They may still be able to salvage this but a year and half ago they were light years ahead of the competition and had the wind of Directv at their back. Now, who knows.... NO, you are missing the point. It isn’t about trying to reproduce the web on the TV. Buying things online isn't easily done for a large percentage of the population - if you think about it, shopping carts still are not standardized. Website shopping experiences differ from site to site. Think HOME SHOPPING NETWORK AND BARRY DILLER. Now think… the ability to purchase the sweater that someone is wearing on a sitcom…. Think about applying a direct response advertising approach and metrics to television advertising. It is about making television content actionable again with a a true trackable return on investment. It is close to happening and beta tests have been witnessed by a few. M2: no, not me, that is what I use the computer for. However, the same folk who buy the Microsoft TV Internet terminals might get excited for this. Not just yes, but HELL YES. I've submitted this a few times as a Request for Feature Enhancement to TiVo. It is just such a simple idea really. For example, they now offer previews of new music from Best Buy. If I like the songs why can't I buy the CD right there and then? Or pay to download the rest of the album and have it pushed to my Home Media Server. TiVo has one very strong thing going for them - they have top notch UI developers. They could develop a very easy to use home shopping portal if they so desired. Not at all, the user interface does not lend itself to it. This would be an interesting gimmick, however TiVo would only realize some kind of middleman fee, no real profits here. The development time and implementation would take a long time to payback. This wont work. People are putting PCs in their living rooms. How is Tivo going to compete with that? People dont keep their WebTVs around because they prefer the shopping experience. This would have to be a seem less process. Perhaps leaving the video playing in a smaller window while I shop? Personally the only way this would make sense from a consumer/user perspective was if it were products in the show. I doubt I need to "buy" toilet paper on my television. Again, passive vs. proactive. If certain shows could show what an actor was wearing and buy from live TV perhaps that would be attractive, especially the younger audiences. Personally it sounds like a way to satisfy ad agencies and corporations complaints about people blowing through commercials. I think the best revenue stream would be the data and other statistics to agencies and networks. Not as detailed as arbitron, but more information is gathered. This might work for shopping channels, but that would be it. I've sent Tivo four emails asking them to incorporate this technology. Ideally, they would serve as a marketing company that stores my credit card information. When I see a commecial for a new PDA, it could be as easy as hitting the thumbs up button and presto a week later I've got a package in my mailbox. This would be very powerful technology and could ultimately serve as a very lucrative source of revenue. I'm happy buying through my PC. I think being able to order downloads of product demos (infomercials) would be great. Sure, why not. Easier to share the process with several decision makers instead of hunching around the laptop screen. But I don't miss it for not having it now. It would be amazing and extremely profitable if viewers could purchase products shown in TV shows. I envision a button on the remote where the viewer pauses and prices come up for various items shown on the screen at that point in time. The viewer could then toggle to the item they want, view more details, purchase/visit the company's website/etc. The electronic commerce stuff isnt exciting to me. If I want to buy stuff on the web I need a keyboard and a high resolution screen, which my PCs give me. I dont see myself buying stuff via my TiVo. I was never a QVC type, but I'm sure if I could ever get my mom to get a TiVo she would check out the shopping on TiVo. This service would not be one that I would probably take part in, but I imagine that it would appeal to the QVC market. Nope. Gotta be able to search. Need a keyboard to search. I was never a QVC type, but I'm sure if I could ever get my mom to get a TiVo she would check out the shopping on TiVo. Personally, I'm not a big "interactive TV" person. But some people will embrace the ability to do things like shop from their Tivo. So having it available is a good idea. Absolutely not. This is ridiculous. I'm happy to buy things on line but not from my TV. t * 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 two machines both with lifetime subscrptions. I feel no remorse, that was one of the features that sold me on tivo. I actually signed up for lifetime with DirecTV when they offered it, and purchased lifetime subscriptions for both of my parents' units. TiVo can certainly gain additional revenue, by offering additional non- subscription services, such as Internet downloads. As the hardware economics change the subscriber demographics (lower initial purchase prices tend to attract more monthly subscribers vs. lifetime purchases), this will be less of an issue. Also, if TiVo continues to build new hardware produts with increased capabilities, lifetime subscribers will upgrade to new units. I've suggested to TiVo personnel that offering a trade-up for lifetime subscribers to move to new hardware would be a good idea - allow someone with an old unit to move their lifetime subscription to a new unit for a fee (say $99). I'd have taken them up on that offer, and then I'd sell the old units on eBay (which would then be purchased by a new subscriber). I think the threat of lost revenue is very minimal. As the industry continues to grow, DVRs will quickly adapt to offer new and improved features, some of which we'll wonder how we lived without. It's hard for me to imagine using the same TiVo four years after I bought it. Even if it still worked after all that time, I'm fairly confident I would want to upgrade to the latest-and-greatest model with new bells and whistles that I can't get with my older model. And I'm sure they're counting on this, too. (In fairness, TiVo is probably also counting on a shorter lifespan for these CE devices than, say, a stereo receiver.) In fact, when HDTV becomes required for all broadcasters, sometime around 2080 at the current rate, I suspect all TiVo users will have to upgrade.<> Not at all. Both our boxes have lifetime service. If TiVo wants extra revenue from me, it has several options: make new PVRs with exciting new capabilities or capacities; offer interesting new add-on services; engage in TiVo-enabled e-commerce; help me promote TiVo to my friends so THEY buy devices and services. And those are just the more obvious options. So no, I have no regrets; my early infusion of cash helped them when they most needed it. My first TiVo has a lifetime sub and I feel no guilt. None! TiVo got a huge chunk of change from me up front rather than a monthly dribble. TiVo gambled I'd get take it out of service before 4 years ended and I gambled I wouldn't. I won. And I suspect they will shortly get another chunk from me. Of course since we also have a DirecTV DVR they get a dribble as well. Yes, I have two units and when an HDTV recorder comes out I'll get a new one. Not at all. I paid around $600 for the whole shebang, and my hard-drive is beginning to waver. I will likely need to buy another drive and try and swap it out to keep it going, or else get a new unit after 4 years of use. Seems fair to me. ---I have 2 lifetime subscriptions and feel quite a bit of remorse. I do not know if the company will be around in 4 years, but even worse is that my subscription is tied to each TIVO machine. So when I upgrade to a HDTV TIVO one day in the far future I will have to pay for another lifetime membership. The lifetime membership should be tied to the person with a small fee for transferring it to a new machine. Certainly I would not have to worry about lifetime memberships with the cable companies PVR's! Are you kidding? C'mon, man. I paid my dues. I bought TiVo when it first came out. I am the early adopter.Including the box and the lifetime subscription, I paid over $600. Were the ones that made TiVo a household name - like Kleenex. i'm free, un-biased advertising where ever I go. I tell everybody who will listen to buy one. I can't think of too many gadgets that i'm this passionate about. You don't see me filling out a survey for my DVD playeror my Treo 600. I have the lifetime service on my current unit. I do not feel guilty that I have already reached the breakeven point on it. (I purchased the lifetime subscription when it was much cheaper, making the payout much sooner than the current four-year timeframe.) As a very early subscriber and paying the lifetime service, I feel that TiVo has received way more of my dollars than they have expended on my TiVo use. The truth is that the cost of delivering the TiVo service is next to nothing, especially when you consider that all newer TiVo's are getting their updates via the Internet, not through dial-up. I also don't use any customer support personnel time. Being an engineer and a technophile, I handle all of my own support and plan to keep my unit alive as long as it remains useful. At some point, HDTV will make sense, and my current unit will no longer be useful. Since the lifetime service is for the life of the unit, when I upgrade, I will be faced with the decision again. At today's lifetime sub price, I would probably make the decision to go monthly, especially as I expect monthly fees will drop significantly at some point over the next two to three years. Even if I turned out to be wrong, it would then be easy to transition to any newer models, as I wouldn't be locked into a particular hardware platform as I am now. There is something to be said for that freedom. I did not at that time, due to my personal financials at the time. I look back, and now that I've had my TiVo for nearly 4 yrs, I wish I had gone lifetime, rather than monthly. Still, the price isn't horrible for such a great service, on either side. Remorse? There should be no remorse for an agreement that is benefitting both sides. TiVo owners tend to be nearly fanatical about it to their friends and colleagues. They are marketing for TiVo in ways that not many other products can or have been able to in the past. I have two units, both with lifetime subscriptions. They offered the deal, why should i feel sorry for them? Its not my job to maximize their revenue. You're starting to sound like a republican - market forces are good when they benifit 'our team' (eg business), but bad when they benefit workers or consumers (eg rising wages due to tight labor markets). - I already think that they are making plenty of money from the 5 bucks a month. We even have to buy the receiver. I think the "lifetime" fee is too expensive and it should also be for the household, not the unit. NO!!!! I have both "lifetime" subs and a sub through Directv. And to be honest, how much does it cost to classify the programming data and provide a dial up network. It can't be that expensive. Besides Tivo should have performed a business model or two before setting the pricing. If they couldn't take that money and make money from it, why did they offer it to begin with? A completely NON-ISSUE. It is of little issue given the new influx of Lifetime subscriptions AND the fact that there is still a mix of people paying monthly. The infrastructure to support the additional subscribers is trivial. Again, the issue is over building critical reach. a signed up for a lifetime subscription after my 2nd month with tivo. this was back in 2000 so i am right at that 4 year mark. no i don't feel any remorse, they made an offer and i took it. i have also sold about 7 friend on buying tivo and i know they recommend it to others themselves. M2: what remorse? The TiVo will continue to work "forever" It is TiVo that loses the monthly revenue stream, which worked out to be approx 2 yr payback. Once the hardware fails, then the obligation ends. I always go lifetime, it is a better value. And I feel no remorse. They choose to amortize the lifetime over four years, that's all. Really after *two* years they start making less money on one unit - $299 up front or $12.95 a month. Break even is just over 23 months. With lifetime the resale value of the unit is higher. I also just hate worrying about monthly payments. I haven't, as the subscription is not transferrable. In fact, I even disposed of my TiVo to get a non-networked unit from Panasonic. I was tried of TiVo downloading ads and putting other advertising crap in their user interface, not to mention the troubling implications of how much data they collect on viewing habits. The UI on the Panasonic is abysmal compared to the TiVo, but it's a small (OK, not so small) sacrifice for my privacy. Since I am a DTV TiVo user I pay via DTV. I am not sure how much gets kicked back to TiVo though. Im month to month. Ill live through it. No. That was their offer and we took it. Since my monthly fee is only $4.95, I don't see the point of a "lifetime" subscription that only covers the "lifetime" of the receiver. I have 2 Tivos at home. Both have the 'lifetime' service and both have the home media option. I do not feel any remorse about Tivo not collecting fees from me. Paying $250 (first tivo) and $300 (second tivo) for lifetime subscription was a big gamble for me. Tivo could always go out of business and I would be the one on the short end of the stick. I signed up for the lifetime subscription on my last Tivo and will again with the HDTV one that arrives today. It's the best deal going. Answer: No remorse, I've owned my Tivo for four years now, so Tivo lost on me, but there are other users who have upgrade to Tivo 2 and I plan to upgrade to HDTV Tivo shortly, so I have a funny feeling that in the long run things will work out. I think that most most analysts would prefer monthly revenue, but as a young company with limited resources having cash in hand, could ultimately be move valuable in the long run then monthly subscriptions. I would predict that within three years the company will no longer offer lifetime subscriptions. As a subscriber, I don't care. Ones and zeros don't cost the company much. We have two lifetime subscriptions. What the 10-Q says is that they took the revenue when we paid for that lifetime sub and amortized it over 4 years. Your question makes it sound misleading. It's just an accounting revenue/expense matching thing, because they estimate the life of a unit to be about 4 years. Considering the pace of technological advances, that's probably not a bad assumption. I do not feel remorse, and here's why: One, I would have probably never bought a TiVo w/o the lifetime option. I would not have wanted an open-ended subscription fee. Two, it's the lifetime of the unit, not the person. If I buy a new unit, I buy a new subscription. They did allow a one time transfer from Series I to Series II units, which we took advantage of. I don't feel bad about that either, because not only did it encourage us to buy a series II we really wouldn't have any other way, but we passed down our Series I to a friend, who now has a monthly subscription on it, so they did get the extra revenue anyway. I am on a lifetime subscription. I would imagine after 4 years I would have a new TIVO. I think 4 years is a good estimate of product life. On the other side of the point you seem to be making is the fact that any revenue recognized today will be there every quarter for the next 4 years or so. Compound this with sub. growth.... I never bought a lifetime sub for any of the three TiVos I have owned, as I figured the device would be obsolete in a couple of years anyway, and I'd replace it before the lifetime service saved me money overall. I was mostly right. As Replay have discovered, not having a monthly fee can be a real problem going forward. I believe I have a lifetime subscription. Is it really that expensive to develop programming guides? Personally I think the subscription thing is inhibiting sales more than doing anything else. I have a lifetime subscription to TiVo. I do not feel remorse as I realize that TiVo will indirectly receive revenue from me. This is because I am a champion of the product. It has changed my life in so many ways that I take every opportunity to tell others about it. Nope. Nor do I ever feel remorse about buying things on sale. If they didn't want me to buy at that price, they wouldn't offer it at that price. I don't have a moral obligation to maximize their profits. When I had a "stand alone" Tivo I was paying monthly. I am now a DirecTV Tivo customer and still pay monthly, but at a reduced rate. In general though, paying up-front for Lifetime service allowed Tivo to accumulate more revenues early on which gave them more operating capital. The reward for anyone that helped Tivo is such a way is that they now basically get "free" Tivo service. First, the company has a limited source of revenue. With lifetime subscribers like me, TiVo will never have an income stream going forward - which is a failure of its business plan. How would Comcast stay in business if it offered a lifetime, one time fee for cable service? It wouldn't. I believe I have a lifetime subscription. Is it really that expensive to develop programming guides? Personally I think the subscription thing is inhibiting sales more than doing anything else.t No. I never signup for lifetime subscriptions for anything, especially technology. Companies come and go too much to make this a good bet. When my monthly TiVo fee dropped by 50% as a DirecTiVo customer, this just reinforced my decision. The lifetime subscription is great for a household's first unit, but as you add more, the newly reduced monthly rates for additional units makes more sense. This is especially true since the subscription is for the life of the -hardware- not the life of the subscriber. I'm about to replace my original TiVo so I can take advantage of the some of the new features of the Series 2 (the Home Media option). I'll sell it off and recoup a good part of my original cost. Remorse, no way. I looked at it as an investment in TiVo. I took the risk that they would be around long enough for me to get my money's worth out of that lump-sum payment; and they got to use my money to grow the business.. After 4 years I would expect my Tivo to be obsolete and upgraded due to advancing technology and expanding storage space. If I paid for the lifetime subscription, I would feel no remorse -- they already booked the revenue over years 0-4. They should still be making money off of me by a) selling me products or b) selling viewing information to advertisers. There is a lot of money to be made in TV viewing data. They should focus there. * In general, what do you think Forbes.com readers should be told about TiVo the company, from a BUSINESS point of view? Number one is that TiVo is a software company. They have been excellent in building partnerships and relationships within the entertainment industry, and that will be a key to their long-term success. Their biggest challenge is for the cable/sat companies to either directly adopt the TiVo technology, or adopt the open industry standards (OpenCable) that will enable TiVo to sell high quality PVRs to all customers. Over the next two years, the PVR hardware business will become uninteresting. Since the component performance requirements are known and relatively fixed (if it can record 2 HDTV shows, and hold 40-80 actual hours of programming, that's good enough), there won't be any dramatic differences in hardware costs among the providers. The difference comes in software, and no one h