The Future of Tivo, And The Changing Relationship with Advertisers

Thomas Hawk has a fantastic post summarizing a recent interview with Tom Rogers, CEO of Tivo. Two interesting issues arise when I read this. First…

Some interesting things came out of the interview. Today TiVo's marketing strategy involves users buying TiVo boxes and then subscribing to their service. According to Rogers we may see a possible subscription only model similar to what the cable company and satellite providers offer for TiVo in the near future. Recently, TiVo has been testing a subscription only model and is considering making TiVo available without a large up front purchase.

This makes me wonder about competing in an industry when your flagship product is usually sold as part of a bundled set by someone else. My parents have DVR, which is a service similar to Tivo that is provided by the cable company. Bundling it with cable service makes it ridiculously easy to buy, and you only have to deal with one company, not two. Of course, Tivo has the advantage of being independent of the cable/satellite system you use. I think a move by Tivo to a subscription only model benefits them if they can differentiate themselves on service, available options, and independence.

The second interesting thing…

"About a year or so ago TiVo was a real pariah in the view of the advertising industry," said Rogers. "Today we find that has totally changed. Yes, TiVo does allow people to fast forward through ads and yes that's an important feature of TiVo, but the advertising industry has come to understand that that's going to happen no matter what. And the issue now is how do you create a new relationship with the viewer so that advertising messages get there and they are looking at TiVo as that platform increasingly as potentially the way to do that."

How do you court an industry when you have basically ruined their old standby method, the 30 second tv commercial?

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When Tivo launched, or when any company like this launches, one of the biggest decisions they have to make is whether to go it alone or partner with someone else. If you partner and sell your product through someone else (like a cable company), it's a win-win. You get help in distribution and can piggyback on their salesforce, but you also give up a cut of profits to them. And of course, they may want an exclusive deal. But if you go it alone and have a technology that isn't that complicated, you risk having someone release their own version of your product (the way many cable companies have done). It's a difficult decision, but it demonstrates the importance of understanding your industry, anticipating your rivals' responses, and having a sound strategy from the beginning.