Digital Video Recorder: TIVO, Case Study Example

In 2005, what is happening to the DVR business?

There was profound upheaval in the DVR business. First, the founder of TiVO and the second-in-command decided to retire. Second, DirectV, previously a cooperator with TIVO, decided to build its own in-house DVR device. Finally, as a result of the first two and other factors, Tivo’s stock dove to a three-year low.

Is there any issue with TiVo’s user friendliness?

In general, the TiVO platform is easy-to-use; there are no dramatic problems with user friendliness.

How much of an impact will the DirectTV split have on TiVo?

The DirectTV split will have a palpable impact on TiVo’s business. First, TiVo only had three million total customers in 2005- many of those through the partnership with DirectTV. Indeed, DirectTV accounted for roughly 66% of TiVo’s customers in 2005. In addition, DirectTV’s bid to develop its own DVR business was a harbinger of further competition from other firms.

The TiVo unit is not a scalable platform – do you see any issues with this?

Scalability is a problem with the TiVo unit: That is, without being an easily scaled product, there is a limited market for further sales.

TiVo is exploring other options like the Home Media Option (HMO). What are the pros and cons of proceeding with these different paths?

TiVo essentially chose the HMO option because its other businesses were being canonbalized. On the plus side, this move would allow for a larger market; on the downside, the firm would likely face new and more competition.

TiVo sees its DVRs filling the middle niche of the market (above Cable DVRs but below Media Center PCs). Do you see any issues with this?

The main issue is that TiVO could lose market share from either the top-end or the lower-end. That is, customers might move to another cheaper or higher value platform.

The CEO is pursuing several different strategies, including Stand-alone DVRs to be sold in retail outlets, the Comcast/advertising initiative, and content distribution. Do see any issues with the multi-prong strategy? Do you see any benefits?

The multi-prong strategy will probably force TiVo to take their off the main business. That is, having a firm market position in one area is better than having a small market position in a number of different niches.

What has happened with TiVo over the last year? Did their plan work?

TiVo has essentially changed toward providing services for cable companies as other companies began to canonbalize their business. I wouldn’t say their plan worked: But they are still in business.