Addressing the Future Prospects of TiVo Brand

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Table of Contents

Introduction
Technology and Price
Features
Marketing
The Network/Advertisers Dilemma
Competition
The way forward
References

Introduction

TiVo is a popular brand of Digital Video Recorder and is an innovative device which aimed to phenomenally alter the Television viewing habits of US consumers. It was founded by Jim Barton and Michael Ramsay who initially planned on equipping homes with a “home network” device but later deemed the idea to be an overly complicated one, and started focusing on the rapidly improving hard-disk technology. While earlier they wanted to empower consumers to control the whole house, eventually they came up with the concept of recording digitized video on a hard disk. This would allow consumers to watch their preferred choice of programs when they wanted to: basically, it took control away from network programmers and placed it with the audience. They could now shift programming and skip advertisements. Originally Teleworld, Inc. the company was renamed TiVo, Inc. on July 21, 1999, almost 4 months after the first Tivo was shipped. Barton and Ramsay teamed up with the consumer electronic powerhouse brands, Sony and Philips, to ensure superior manufacturing, distribution and promotion to the retail network (“Tivo”).

Fourteen months post-launch, TiVo could boast only 0.04% market penetration, with 42,000 subscribers. This was a disappointing result for a country where households prioritized owning a television over a telephone service and the average household spent more than 7 hours every day viewing television. The situation was definitely surprising as gauging by the enthusiastic feedback that TiVo owners gave, the product should have been a lot more successful (Koerner, 2002).

Technology and Price

Physically, the TiVo was a black box, set up as an interface, or intermediary, between the broadcast signal and the television. It would digitize the TV signal, compress it and record it on a hard drive. A telephone line connection was required to access the many aspects of Tivo’s functionality, such as downloading updated program guide information everyday.

As far as pricing was concerned, the TiVo service (needed for recording programs and accessing TiVo’s special features) and equipment were priced separately. The box had a price of $499 and $999 for its two models with differing recording capacities while the service was priced at $9.95 per month, $99 per year, or $199 for the entire life of the set. The model with the higher capacity made TiVo generally more expensive than TV sets and a lot more expensive than a satellite setup. The price was too high for a product which was just starting out as a complement to a television set and the benefits of which people were mostly ignorant about (Koerner, 2002).

Features

The highly sophisticated software that TiVo comprised of allowed its users a variety of features enabling them to watch their specific brand of television. They could use the Electronic Program Guide, an interactive menu, to decide on option from the vast majority available. They could watch previews for shows and schedule them for recording, access TiVo’s video magazine, choose from the on-screen TV guide or view the “Now Playing’ option to choose from all previously recorded programming.

A very popular feature that TiVo offered was known as the Season Pass through which users simply specified which shows they wanted to follow that season, and TiVo automatically recorded all the episodes without the user having to prompt it. Users could also record their like or dislike for viewing content via the “thumbs up” and “thumbs down” feature and TiVo would later make program suggestions based on these recorded preferences (Prince, date unknown).

Probably the feature with the most innovative appeal was that which allowed users to pause live TV. TiVo made this possible by recording the signal first, and sending it to the TV set after a time lag of a few seconds. Viewers could now pause or rewind live TV, eliminating previous hassles of interruptions or missing some moments of truly must-see Television.

Marketing

Retail distribution and promotional efforts in outlets were handled by the hardware manufacturers. TiVo itself indulged in public relation activities, online marketing (the TiVo.com website) and did not really go all out with mass media promotional activities. It did succeed in generating buzz for the product but people did not really understand the functionality and technology behind it, often needing detailed explanations and service demonstrations to truly capture the idea behind TiVo. The brand and category both suffered from lack of awareness, even though the names of Sony and Philips did transfer their positive brand image onto TiVo. Also, people were generally reluctant to improve their television viewing style, and weren’t moved to do so unless they experienced the benefits of TiVo first hand (Jaffe, 2004).

This signified a huge marketing problem for TiVo. It was encouraging people to change their television viewing habits, a set pattern which was one of the defining elements of the modern American lifestyle. Behavior which has been long established was being invited to change and the conventional playing field which had the networks and advertisers on one end and the audience on the other would be radically altered in terms of the balance of power.

The Network/Advertisers Dilemma

TiVo was both an opportunity as well as a threat for networks and advertisers. For networks, it meant they could no longer aggregate content and consumers could choose their personal line-up of shows to watch at the times they wanted to watch instead of particular prime time slots. And if the prime time slots were no longer deemed important by the audience, and if they were provided with the option of skipping ads through TiVo anyway, advertisers had no idea how media space would be negotiated and eventually, who would even watch their ads.

TiVo’s team however, sought to work with the media industry instead of against them. They wanted advertisers to develop more personalized, better targeted and more interesting ads and they believed TiVo could help them by keeping track of audience preferences and viewing habits. Telescoping ads was another idea TiVo offered to advertisers by which users could select ads they wanted to watch from a multitude of options. TiVo planned on aiding networks by providing them with viewer’ responses to new program launches, recording plans, program preferences as well as ensuring viewership and loyalty through the season pass (Speicher, 2006).

Competition

Competition had brewed in the time since 1999 when TiVo had been introduced as the sole player in its category. Replay TV and Microsoft’s UltimateTV were the two main threats, offering a mix of similar and enhanced features. The former took out ads which specifically focused on particular features, educating consumers about the benefit they would derive from it. Microsoft also engaged in regular marketing communications about its product which was supposed to be technologically sounder than TiVo.

The way forward

TiVo needs to emphasize through its marketing the features of the product and give the regular television viewers a reason to alter their habits and incorporate TiVo in their lifestyle. Television ads which simply arouse curiosity or focus on the basic premise might have less of an impact compared to communication which focuses specifically on functionality and benefits offered. Mass media promotion must be coupled with event marketing and customer relationship management: TiVo should educate its target market about the product as well as offer installation, workshops, demonstrations and other similar services to eradicate customer inertia as well as clear misconceptions about the product and technology involved. As the early adopters have not been able to market the product properly to what could have been an early majority, TiVo needs to go back to square one and try and capture a new chunk of the market, who might be interested but not enough to research into TiVo’s concept, and who might also consider TiVo a convenient option but one they really cant afford. Dropping the price point would help in generating more interest for the product among price-conscious consumers who thought it to be too expensive to really find out more about.

TiVo needed to take the path that ReplayTV and Microsoft were taking as being the first one in the category and being such an innovative product at that, more informational and functionality-based communication efforts were needed. The revamped marketing plan which its team had come up with is definitely the need of the hour. The fundamental mind shift which a product like TiVo requires in order to succeed takes time as well as a lot of powerful word-of-mouth advertising. Present owners should be offered incentives to attract more customers by way of testimonials and positive publicity. The benefit that TiVo has the potential to bring to customer’s consumption pattern must be marketed aggressively, or else TiVo stands the chance of being a failed, albeit very good, product.

References

Jaffe, Joseph. “How Old Marketing Failed TiVo”. iMEdia Connection. 2004.
Koerner, Brendan. “TiVo, We Hardly Knew Ye.”2002.Web.
Prince, Sal. “Top 10 TiVo Digital Video Recorder Features”. About.com.
Speicher, Steven. “The Clicker: Is TiVo Killing Television?” Engadget. Web.
“TiVo”. Wikipedia: The Free Encyclopedia. Web.

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