TiVo

Group 6
 Advantages Disadvantages

Product ● Control what you watch and when you ● On-screen program guide confusing
watch-Pause live TV and record 30 hours of
program ● Navigation around the unit’s menu difficult

● Customer satisfaction level high as 72% - “a ● Difficult to explain the product features
lot more enjoyable” and 90% would
recommend to others ● Performance issues as pictures broke or freezed
upon changing channels
● Users were addicted to it due to Thumbs
button feature which could automatically ● Required telephone line connection so that
personalise content according to preferences features could be upgraded and downloaded

● Potential partnerships with DirecTV and ● Some users did not like being spied on as TIVO
AOL for bundling collected user data

● Partnerships with network programmers like

CBS, Disney for featuring in services and
with firms like P&G and GM for defining ad
formula
 Advantages Disadvantages

Price ● Drop of price from $999 to $399 of the 30- ● Price of $1000 more expensive than other TV
hour recorder might increase their market sets
share and put entry barrier to new entrants.
● No reference point for users, being a new product
● Hardware and software were priced
separately so that users have a choice. ● Possibility of interruption in production of 14-
hour recorder

● TiVo has been making net loss since its inception.

● For salesperson - competitor ReplayTV included

service in price ($200) - higher commission than
TiVo.
 Advantages Disadvantages

Communication ● Presence in different media channels ● Lack of awareness led to poor sales, as only 50%
TV ads - introduce the value sales conversion
provided, raise awareness and
promote brand identity ● Many functions of the product were not easy to
Print ads - more explanation of explain.
features and benefits
Tivo.com - deeper educational ● TV ads like “Network Executive” though catchy
experience of what the service is was not self explanatory in spreading awareness.
about, how it works, how much it
costs, where to buy and what’s ● Confusion in press about the type of product. Led
needed to buy TiVo. to fragmentation of views about the category.

● Challenge of inviting people to change their

● Catchy ad campaign so may attract hardwired consumption habits.
attention of early adopters
● Adopters were not promoting TIVO as they held
fragmented views of TIVO
 Advantages Disadvantages

Physical ● Availability in most major consumer electronic ● Required extensive demonstration at

distribution stores the point of purchase

● Philips and Sony manufactured and promoted ● No control of TIVO as Hardware

TIVO in their retail stores. It ensured reliability manufacturers took over retail
and effective distribution distribution and in-store promotions.

● Salespeople of Sony and Phillips were

not motivated enough to promote
TIVO

● Training given to salesperson costly as

high turnover
Consumers
Resistance to TIVO

● Consumers were reluctant to change their TV consumption habits

● TV watching was a passive activity so too much control in the hands of users may not be desirable
○ It was found that users did not pause live TV to investigate rather only due to interruptions like
phone calls
○ Sometimes users had to delete the automatically recorded episodes which TIVO did on the basis
of likes. They did not desire so much of involvement with low priority activities like TV
watching
● The features were difficult to understand
○ Onscreen program guide was confusing and the process of navigating around the unit’s menu
was incomprehensible.
● Performance issues - Pictures broke or channels froze when changing.
● Changing habits - The product was not just adding feature to pre-existing preferences but making
change to the consumer pattern of the typical ritualistic way of watching TV, acceptance was less and
change was viewed with resistance.
 Resistance to TIVO
Network programmers

● High risk of skipping advertisements which is the big revenue earning bucket for network companies
● Shift of power to TiVo and consumers
● They packed their shows together in the prime time in the hope that users will watch anyway due to
inertia. With TiVo’s entry, it’s not possible

Advertisers

● Skipping of advertisements will result in loss of leads and customers for advertisers.
● Conventional way of advertising would be jeopardized since there would be no way to estimate size of
audiences as a function of airtime.
● Selling space to marketers-on the basis of estimated reach- would also become difficult.
Product Strategy
● Connection to a telephone line was required for TIVO but in 1999, more American household had
television than telephone service. TIVO should eliminate the telephone from the service requirement
and automate the upgrade and programming schedule download feature.
● The product is difficult for the consumers and sales executives to set up and use. TiVo has to focus more
on usability of the product and make it simpler in its next versions.
● With competitors offering features such as “Quick Skip” and “30-second skip”, TiVo should also provide
the a feature wherein it’d allow viewers to skip an ad after viewing for a stipulated time, say 8
seconds. This would ensure that TiVo remains competitive in this rapidly emerging market.
● Tivo should refrain from entering into a partnership with DirectTV since it has already partnered with
Microsoft’s UltimateTV and doing so would only increase the competition.
● AOL could be considered as an option for partnership only after due diligence. Efforts need to be made
on the product implications of this partnership.
Product Strategy - ads
Ads are the most prominent part of entertainment industry pouring revenue. Getting rid of
ads entirely would result in domino effect loss of business for the whole entertainment
industry. So, ads should be accommodated in the screen without disturbing the consumer

Ads ideas:

● In-product placement

● Embedded ads (banner)

Product strategy
Product placement Explicit product placement: In this the attributes and
benefits of the product is clearly explained
TiVo can convince ad agencies to place their
advertisements implicitly or explicitly within the For example: Oppo in BiggBoss
television TV shows, serials or movies.
· Through product placement Oppo tried to
Implicit product placement: explain the product features like the
quality of the front camera.
This is a way of promoting the product without
explaining the features, usage and other attributes.

For example,
Product strategy
Embedded advertisement

● TiVo provides the consumer’s data related to the age group, preference of tv
shows, time of watching, high rated program.

● The advertisers can customize the data to use it to advertise their ads related to
that specific TV show content

● It is targeting the consumers who are willing to like that specific ad.

For example: If children are watching cartoons the advertisers can display the
advertisement posters related to Kids at the bottom of the screen.
Price strategy
● TiVo can provide lifetime subscription plans for the users at a discount. This will enlarge the market share
and capture target segment. For innovative products with disruption, it’s necessary to capture the market.
After capturing the market, a different price plan can be give to the users.
● TiVo has brought a revolution in the entertainment industry and offers a value that consumers at that time
had not thought of. So, TiVo priced it as a distinct service not included in the cost of hardware.
● Recording capacity was the main pricing metric for the black box - the 14-hour box being priced at $499
and the 30-hour one at $999.
● With 70% of the consumers using the recording feature, TIVO should offer a bundled price including the
recording service as that would further persuade the customer to try the feature. Keeping it as an
additional service can acts as a barrier for consumers.
Physical distribution channel strategy
● TiVO was being pitched by the manufacturer’s sales reps who were unable to provide extensive

explanations and in-store demonstration and turnover rate was almost 50%. TiVO should used its

dedicated sales rep at the Retail stores for the sales pitch and demonstration.

● Standardize the pitch as different sales people are now using different pitches. Leave some room for

improvisation. This will also help reduce training cost.

● Bundling with Sony and Philips products can be used to better promote Tivo.
Communication strategy
● TIVO provided high value to customer but also required significant change in the consumer behaviour.
Long haul products requires a long time frame to fit into consumer daily life. Hence, TIVO should not
aggressively spend on commercial advertising otherwise they will run out of capital quickly without
achieving much penetration. They should plan for the long time horizon for the market penetration and
should not try to compare TIVO market penetration with other video recorders.
● TIVO should focus on few features like recording for the core communication strategy that matters
most to customer rather than “Pause” which was appealing but seldom useful. Also, usage of multiple
features during commercial and sales pitch useful features gives a perception to customer that it is
difficult thing to operate.
● TiVo can leverage its partnership with Sony and Philips for advertising as both the companies have
good brand name in the market. A standardised pitch by dedicated sales rep would further help TiVo
to change consumer decision.
 Concern How to address

Advertisers ● High risk of skipping ads ● Options for “Quick skip” ads
resistance ● Banner ads in the screen so that show
● Shifting power to TiVo and consumers space is not disturbed
● Alternative modes of data analytics
● Difficult to use conventional viewer
with the black box and TiVo
panel data to predict audience size technologies.

Cable ● Loss of control ● TiVO can provide data about customer

operators ● Loss of revenue from skipping consumption patterns which will be
resistance advertisements useful for Cable operators to set the
● No prime time viewership timing of programs to ensure the
maximum TRP.
● Season pass guarantee viewers that
they don’t miss any episode of their
favourite TV shows which increases
network viewership and loyalty.