Much of the thinking here is actually Bill’s. Though we’ve bashed TiVo (and from TiVo’s perspective, probably incessantly) a lot since our launch, we honestly don’t disagree with its current strategy. TiVo to its credit did spend less money, cut marketing out almost entirely all while growing the amount of cash on hand it has to weather the storm.
Being in the intellectual property business can be a good business to be in. It’s not at all clear TiVo will receive the full amount the court has decided in its favor (Echostar/Dish will likely tie this up for years if it can), any of it at all, or merely a fraction of the ~$100 million via licensing agreements. The stock price is seemingly being held up on the belief that somehow, some way, TiVo will cash in on its intellectual property.
Based on this, we can’t really fault TiVo’s current strategy which seems to be:
- Cut back on all marketing spending for the product
- Hope like hell that the patent lawsuits will result in big payouts
- Have enough cash to weather the storm (TiVo has more cash on hand this quarter than last)
Even TiVo, based on its marketing spend, seems to have gotten the religion that it’s a bad business model to try to attempt to compete with the “free” DVRs cable companies are giving away. I know some TiVo purists do believe that TiVo is so vastly superior to the “free” DVRs, but what those people think doesn’t matter to the market, even if it is true. Our data indicates that about a million new DVR subscribers per month have come on over the last year or so via cable offerings and this while TiVo is losing roughly 50,000 subscribers a month.
TiVo has enough cash on hand to weather many more quarters of subscriber losses like these. But, to the degree it has pulled back marketing, it also won’t add new subscribers so the net losses in subscribers could grow even further. TiVo’s model seems, for now, to be to have enough cash on hand to wait it out and hope for the best as well as licensing royalties from all DVR providers. Despite some bashing on our part, all things considered it seems a sound strategy.
August 27th, 2008 at 11:12 pm
That court decision came down in the Federal Court in my humble little home town. It sure got attention, all the way up to the Supreme Court, where we got an unfortunate unkind remark from one of the justices, which I didn't appreciate. The judge in the court has a reputation of moving the cases at a lightning speed in terms of a Federal Court., and the jurors themselves drive in from all over the district. As usual, some not well meaning journalists tried to characterize the cases dealt with as being prejudiced against the bigger corporate entities by the local yokels, when in truth, people come to the court as jurists from as far as at least 60 miles away, if nor farther and are not, contrary to the insinuation, “Stepford” people who can't make a fair decision based on the evidence.
I know alot of people like Tivo, especially since Tivo is said to have an arrangement to give out its audience info to the media businesses, so they figure if you aren't a Nielsen family, its the next best thing to get your actual viewing habits monitored, I am not quite sure how that works, but that seems to be one thing in Tivo's favor.
I assume its like the Barbie Doll thing. Since they won their case, others can make facsimiles of the Tivo, like toy companies make Barbie-type dolls, but whatever makes a Tivo a Tivo, the Tivo company, right now, has exclusive rights to it. The phenomenon itself has certainly helped the economy of my birthplace, but if Congress, or the Supreme Court, gets pushed by big shot businesses or some other big shot outfits, then I understand that cases like Tivo would end up mostly in Federal Courts in California and New York, where they will not get resolved as quickly since the dockets are bigger, which just costs everyone more money, the government offices as well as the companies, who will eithe raise their prices or take a write off.
I suppose we'll see if the Tivo situation remains as interesting as it has been. .
August 29th, 2008 at 2:49 pm
Know how TiVo could keep me loyal? Don't make me pay for a new subscription if I buy a new box. I bought a “lifetime” service deal when I bought my Series II box back in 2003. I knew I couldn't transfer that service to a new box and was fine with that. But I'm going to run the box into the ground, then get a cable DVR like I have on another set in my house.
If TiVo only made me buy the box, I'd strongly consider it, but they aren't that far ahead of what I get through Comcast (for my needs) to make me consider buying a unit and ponying up a subscription fee.