TiVo was incorporated in 1997 and the company made its initial public offering in September of 1999. For the first part of this decade TiVo dominated the Digital Video Recorder or DVR market. What TiVo did not prepare for was the major cable companies would begin to provide DVR in their digital cable boxes. This made for a smooth transition for HD customers. Digital cable began to be the approach most HD customers took to receive the high definition signal, and the boxes came equipped with HD recording capabilities. TiVo customers were left with a box that could record programming, but only in standard definition. TiVo packages began at $12.97 per month or a one-time fee of $300, which last for life. For regular cable subscribers this was a good deal. (Personally I paid for the lifetime service in May of 2004 and I still use my TiVo on my bedroom TV, thus every month I save 12.97).
I am a special case because personally I think DVR is the greatest invention since the Internet, so needless to say I was an early adopter. The more patient consumer had the opportunity to watch the market, and realize that in order to get the best bang for the buck, the cable companies DVR box was the best deal in town. For example, Sunflower Broadband in Lawrence charges $12.95 per month for HD box rental and an extra $5 for the DVR service fee. In comparison, TiVo sells its HD DVR box for $300, and the service still costs 12.95 per month. Plus TiVo offers a reduced annual rate, but the cheapest plan costs $300 for three years. In other words DVR from Sunflower costs $60 per year and TiVo cannot costs less than $100. More importantly in order to have more than four HD channels customers must pay for digital cable so the $12.95 box rental fee still exist in addition to the TiVo charges.
The whole point of rattling of these numbers is to illustrate how impractical TiVo is in the HD world. TiVo asks customers to pay nearly double the amount for a service, which is marginally better than its counterpart. I’ll concede that TiVo is the Mac Leopard of DVR interfaces. Most people do not know this because so many more people use digital cable DVR, but the TIVo software runs smoothly and is extremely user friendly. However, people don’t want to pay the premium for a better interface when the cheaper version does an adequate job of accomplishing the primary goal: record programming in HD or standard definition.
TiVo provides things such as TiVo-To-Go, which allows users to transfer files to their computers. Also, TiVo lets users transfer pictures and music from their computers to the TiVo box. Recently TiVo announced that users could access YouTube from the TiVo box bringing the YouTube into the living room. However, none of these improvements or features will make consumers shell out the extra cash. My suggestion to TiVo would be to exit the hardware business and begin selling its superior software to cable companies, which would then distribute its boxes with TiVo built in. The digital television revolution will continue to move toward high definition and it will keep moving with or without TiVo, so they better make drastic change if they want to stay in the race.