The Critical 'I'

Read. React. Repeat.

Friday, November 21, 2003

look ma, no tapes!
Is the party over for Tivo, just as its brand name has become a synonym for any type of digital video recorder? That's what analysts like Josh Bernoff at Forrester Research think, as they believe the continuing rollout of settop/DVR combos by cable providers makes Tivo's days numbered unless they can find a partnership with one of those cable companies.

I've said as much, as part of my top ten media trends for 2003 (No. 3). My feeling is that having a separate bill for DVR service, even if it's a nominal amount like $10-15 monthly, on top of a cable bill, is an impediment. Integrating that charge into the cable bill, even if it's for the same amount, is a much easier sell for the majority of consumers. Thus, the DVR that's provided by the cable company has a much better chance of penetrating the market, and dominating it, to the disadvantage of Tivo.

There is the question of whether Tivo's headstart over more generic DVRs, and its brand power, won't help it survive. That's the tack that Tivo enthusiasts like GreenGourd take. Not surprisingly, Mac users also feel that Tivo is in a similar position as Apple Computer, i.e. being able to thrive despite serving a niche market. The feeling here is that Tivo doesn't have to concern itself with becoming the choice of the majority of consumers, because a fiercely loyal fanbase that relishes being on the cutting edge of this sorts of service will keep it afloat.

Obviously, I don't agree. The Apple analogy doesn't really work, because the niche for Tivo is much smaller, and not as well defined. Apple can point to key industry loyalties like publishing, advertising, education, etc. Tivo doesn't have that; even if you point to a higher-income/better-educated demographic that's adopted Tivo (for instance, I notice more and more celebrity endorsements for Tivo, to the point where I'm surprised the company hasn't recruited a few to do ads), it's not a situation where a group of users need to stick with Tivo in order to enjoy similar service. Fundamentally, you're using a DVR to record television signals; you don't need a particular brand of recorder to do that. So unlike a computer, you don't have the issue of different software working on different operating systems. Long story short, I don't see a real strong reason for Tivo to withstand a flood of competition from cable company-provided boxes.