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The TiVo Company is a company that offers an avalanche of television solutions through a variety of solutions that make it possible for the viewer to enjoy an independent form of viewing. The pioneers of TiVo were Jim Barton and Mike Ramsay. The invention of the company-redefined entertainment in numerous ways as it delivered the promise of much hyped technologies.
TiVo is the pioneer of home entertainment and a creator of the first Digital Video Recorder (DVR). The largest part of the company’s business is in partnerships with leaders in technology and entertainment industry. Some of the company’s partners include Virgin, DirecTV, Hewlett-Packard (HP), among others.
The company partners with the aforementioned companies to provide its customers with branded boxes that incorporate the DVR technology synonymous with TiVo (Barton 28-35).
History, Development, and Growth of TiVo over Time
The TiVo idea began to shape up in the late 1990’s with Ramsay and Barton working together to provide a project network in Orlando. This was necessitated by a joint venture between SGI and Time Warner that culminated in the creation of an interactive television system.
It took a short time for the pioneers to come into a realization that they could develop a similar system, which exhibited greater intelligence at a consumer friendly price. The system on their mind would be easier to use. Moreover, viewers would be capable of controlling television programming and timing. The aforementioned idea was the core part of TiVo genesis.
To transfer this idea to reality, Jim Ramsay and Mike Barton quickly assembled of a top-notch team that would facilitate delivery of the TiVo promise. Subsequently, TiVo blended Silicon Valley, Madison Avenue, and Hollywood together to create a television service that was personal and to enable the masses to access.
In 1999, this company unveiled the television service at consumers at an electronics show for national consumers. From this time, the company continues to work diligently to ensure that viewers enjoy better television. This feat has been achieved through teaming with industry leaders to foster changes in the manner that consumers can interact with and enjoy the television (Barton 29-36).
Following the launch of the first working TiVo prototype, at the 1999 show, and limited time for the completion of an authentic working product, Mike Ramsy dared the TiVo Company to ship the DVR by April 1999. This was to the thrill of everyone with many dubbing the effort ‘the Blue Moon’.
To deliver this promise, the team working on the idea had to dedicate time and effort with most of the members spending the entire March at the company’s premises. In March, TiVo rolled out the first box from the assembly point.
Following the launch of TiVo, the company has been made available in Mexico, Taiwan, United Kingdom, Australia, Canada, and Puerto Rico. The Cable CARD standard is incorporated in the new models of the company albeit limited in the United States (Chorianopoulos and Spinellis 50).
Internal Strengths and Weaknesses for TiVo
TiVo uses patents to guard its products from imitation. These patents enable the company to operate effectively without the fear of imitations. Moreover, this strength has enabled the company to amass profits and ward off competition. Since its launch, the company has been conducting successful campaigns, which have enabled it to have a bigger market share relative to its competitors.
The company has internal strength in licensing technologies. Some of the companies that have such licenses are Toshiba, DirecTV, Pioneer, and Sony.
Furthermore, because TiVo integrates its technologies with the products of the aforementioned companies, TiVo is capable of necessitating the adoption of the future products for these industries. In return, this will facilitate the adoption of TiVo services. The company’s strength enables them to target the consumers effectively (Ireland, Hoskisson and Hitt 28).
With regard to the company’s internal weaknesses, TiVo tends to rely on its partners. The company over reliance on its numerous partners is a weakness as this implies that the company trends are determined by the business trends of the partners. A slump in the sale of products by its partners implies that TiVo will experience a similar slump.
The company has a weakness because of the separation from its customers by its partners. Most of TiVo customers go through the company’s partners in case they want to seek clarification or launch complaints. This feat prevents TiVo from giving direct assistance to its customers as these customers go to the partners first.
In the light of this, there exists the need for the company to appoint directors who will influence the future direction of DVR. In addition, the TiVo gets core product components from a supplier. This is a weakness because the supplier can decide to charge higher prices to the detriment of TiVo’s productivity (Ferrell and Hartline 295).
The External Environment Surrounding the Company
Constant changes are prevalent in the TiVo’s external environment and the industry in which the company operates. TiVo can formulate its strategies after accessing if the external environment favors its operations. There are general environmental factors that explain the nature of TiVo’s environment. These are global, social-cultural, demographic, political/legal, economic, and technological factors.
The youth in the United States are relatively more technologically knowledgeable than the older population. Consumer demographics of the TiVo Company are individuals aged 25-45 years. The company focuses on market of the individuals in their 30’s prior to designing services and products.
Since the company’s inception in 1999, the aforementioned age group has evolved into sophisticated user of technologies formulated by the likes of TiVo. Subsequently, this has compelled TiVo to increase breadth and depth of the available technology in the services and products (Ferrell and Hartline 295).
In the technological domain, understanding and use of DVR is rampant in the United States. Moreover, other countries embracing the DVR are at their introductory phases. Through technology, even the average homes have been rendered capable of imitating the basic functionality of DVR. Moreover, the cycle of television purchase has shortened because of technology updates, faster decline of prices.
TiVo technology of stand-alone televisions replicates a computer’s functionality. In the economic environment, the recent recession that rocked financial markets affected the company’s sales and was a blow to companies that sold luxury items. TiVo was among these companies because its DVR concept is not a necessity when watching or using a television (Chorianopoulos and Spinellis 49).
The economic turmoil translated to less income at the disposal of the consumers, which in turn was responsible for lack of purchase of luxury goods such as TiVo sets. Currently, the company is grappling with the effects of the recession with the customers being cautious buying luxury products.
Despite predictions that the economy of the United States will continue exhibiting an upward trend, TiVo sales range from slow to moderate (Barton 30).
The political/legal environment affects the way the company conducts its operations. Currently, there exist numerous unsettled laws concerning intellectual property. The foci of these laws have been the ability of technology to alter shows. Legal issues with Internet use have also characterized the legal climate. Particularly, YouTube has been airing copyrighted material devoid of the owner’s permission.
Lawsuits on patents are currently going on in the technology front over the need to enforce patents. Furthermore, several bodies are charged with the responsibility of ensuring that current regulations and laws are enforced appropriately and involved companies are in compliance.
Generally, the political/legal environment surrounding TiVo’s operations is dynamic because of constant scanning and monitoring (Albarran, Chan-Olmsted and Wirth 294).
TiVo company’s global environment is characterized by two aspects, which are emerging markets and intellectual property rights. Enforcement of intellectual property legislation and copyright laws is marred with inconsistency in the entire global market.
Currently, the most vital aspect in this realm is the enforcement of such laws because technology is always reverse-engineered in countries like China and resold at lower costs in gray markets.
Moreover, new markets such as Brazil, China, and India are advancing and the DVR market is likely to expand with the middle and upper classes in these markets increasing in size and wealth. TiVo should be wary of these developments because they are globalization benefits that come with piracy risks and intellectual property infringement (Barton 29).
SWOT Analysis
Albarran, Chan-Olmsted and Wirth (2006; 297) reveal that TiVo has numerous strengths with the demand of the DVR rising since the public understood and accessed the company’s technology.
With the television being pivotal in the American life, the strengths of this company are obvious. The company has strength in increased subscriptions particularly in the United States because no other country has surpassed large television viewing than the United States.
Factor conditions in the United States are sources of strength for this company. The company has access to capital from well-established corporate banks and private individuals. The entrepreneurial culture in the United States guarantees the company knowledgeable workforce, which cannot be replicated in other countries.
Communications infrastructure in the United States is an advanced factor and a source of strength for the company. Most of the homes in country have telephone lines and televisions, which are sources of demand for the company (Albarran, Chan-Olmsted and Wirth 297-298).
The company is supported by various industries. Because the company makes products complementary to the televisions, in case the aforementioned broadcasting companies offer poor programming quality, TiVo’s uses will decline.
The company has a market characterized by intense rivalry; Comcast and EchoStar are some of the competitors as they offer generic DVR. Replay TV has also been a major competitor in the stand-alone concept. This competition compels the company to evolve and cut costs while making innovations to its products (Albarran, Chan-Olmsted and Wirth 297-298).
Opportunities and Threats
Currently, TiVo has an avalanche of opportunities. The DVR industry is rising and analysts expect an increase in the number of consumers. Promotion and advertising is a good opportunity for TiVo. The marketing aspect of sponsoring products is an opportunity that will enable TiVo Company to enjoy a larger market share. TiVo has a tempting opportunity in the global market.
The United States is among many countries that enjoy viewing the television. These countries can also provide a larger consumer base for the products of this company. When the company becomes more stable and gains wider acceptance in the United States, control over the foreign markets will be the next move for this company (Albarran, Chan-Olmsted and Wirth 233).
Despite the numerous opportunities for TiVo Company, the DVR industry has a fair share of threats. Satellite and cable providers are threatening the success of this company by producing generic units. An example is DISH networks that have introduced a generic unit that has been subscribed to by many consumers.
Imitations from other companies are exhibiting highly advanced technology than that of the TiVo products. Comcast cable is a company that conducts campaigns aimed at increasing the awareness of the technology used by Comcast but TiVo enjoys the dominance in DVR industry (Albarran, Chan-Olmsted and Wirth 297-298).
The stand-alone concept in television boxes will soon be rendered obsolete. The integration of DVR into set-top boxes will soon phase out the stand-alone concept. The latter has about a quarter of TiVo’s subscriptions. Barriers to entry are low in the market that TiVo is involved.
Nevertheless, the entry of big competitors should be a source of concern, as these competitors will offer more innovative products, cheaper products, and products that can be used with ease.
TiVo may struggle to hold on to its market if it fails to differentiate itself through low prices for its products (Albarran, Chan-Olmsted and Wirth 338). According to Albarran, Chan-Olmsted and Wirth (2006; 298) the DVR industry has been consolidated. Consumer who gets cheap DVR units from rivals will seldom decide to buy from TiVo, notwithstanding the add-on’s and features provided by the company.
Corporate-Level Strategy by TiVo
The corporate level determines the way resources are allocated in the company. The TiVo Company defines its markets based on the age, income, and preferences of the consumers. This strategy has been of great importance to the company because the targeted market segment consists of individuals with high income and technologically knowledgeable.
Through corporate strategy, the company has decided recently to diversify their market through entry into other countries. The company continues to improve the technological features of its products to maintain and expand their market. The numerous partnerships made by the TiVo Company are core part of the company’s corporate level strategy.
These strategic alliances are necessary, as the company cannot manage to venture into the technology and communications industry on its own. Directors at the company set high standards for its officers and employees. These standards are implicit in the philosophy of good corporate governance. The directors have the responsibility of ensuring that the targets of the shareholders are met (Ireland, Hoskisson and Hitt 117).
Business-Level Strategy
The business-level strategy used by the TiVo Company can be accessed upon a closer look at the company’s demographics, consumption patterns, lifestyle choices, and industrial characteristics among other factors. As mentioned earlier, TiVo focuses on customers aged between 25-45 years. These customers are technologically knowledgeable and have the capacity to buy TiVo products despite its high prices.
The lifestyles choices of the individuals in this age bracket are more on luxury and entertainment goods. On the other hand, the industry in which TiVo operates is highly dynamic because of technological preferences.
The TiVo Company adopts a business strategy of ensuring that the customers are equipped with the latest television strategy. Through partnership with major players in the broadcasting industry, the company can cater for the preferences of its consumers (Ireland, Hoskisson and Hitt 29).
The Business level strategy used by this company limits consumer base through the high prices that are charged for its products. Although the company enjoys a better market relative to its competitors, charging lower prices can guarantee a wider market. The five forces model by porter can also explain the business strategy adopted by this company. The company’s strategy has been largely influenced by the influx of major competitors.
Manager must continue to formulate newer strategies to ward off the competitors. Rivalry is rife in the entertainment industry. Price wars have exacerbated rivalry and determine the strategies to be adopted by the company and its competitors. With regard to substitute products, the company operates in a market with few substitutes (Ireland, Hoskisson and Hitt 29).
Structure and Control Systems
The structure of the TiVo Company comprises of board of directors that determine the direction of the company. Other teams involved in the company’s operations are the Research and Development (R&D), the executive management team and the management team.
The management of this company has always been aggressive on promotions and operations. For example, during his stint as the CEO, Ramsay travelled overseas to conduct meetings with electronic giants. The boards of directors in this company are from different companies and backgrounds (Ferrell and Hartline 292).
With regard to control systems, the company the company has personalized the experience of watching the television. The company controls the use of its technology through patents and intellectual property. This company has filed numerous lawsuits in an attempt to control the use of intellectual property.
This form of control is necessary because the company lost a fraction of market share to rivals who formulated cheaper generics. Using the structure and the control systems, the company has maintained and expanded its market share, which is a core part of its corporate and business strategy (Ferrell and Hartline 292-293).
Recommendations
There exists the need for the TiVo Company to combine advertisement, product, pricing, sales, and product package into a comprehensive marketing plan. This strategy will position the company to be a market leader before other heavyweight companies can enter into its market and cause problems to the company.
To achieve this feat, TiVo has to understand the products that make the most sales and where the market is stronger. With the incorporation of new technology, the company will sell complex and new technologies that will change the consumer habits.
Because the company sells entertainment products, the company needs to understand changes in consumer preferences because the entertainment industry is highly dynamic. TiVo targets consumers who adapt to technology at a faster rate and possess the financial capacity to buy expensive products.
The company needs to enlarge its consumer base by reaching out to consumers who have little knowledge about television technology. This is because most of would be potential consumers view the technology used by TiVo as being highly complex. Moreover, there is the need for this company to consider lowering its prices to reach a wider market not financially stable.
From the consumer’s point of view, the company has received low sales of its products mostly because the recession affected the nature with which consumers bought luxury products. Notwithstanding the emphasis on better product capabilities, TiVo needs to simplify its operations. The price of TiVo products is very high relative to that of its rivals who manufacture generics that have similar features.
Unless the company changes its pricing strategy, its market share is bound to reduce because TiVo’s most revenues are from subscription services. In general, there is the need for TiVo to simplify its products by explaining the working and the capabilities of its technologies. To achieve this, the company should focus on expanding their market to include children and the old people.
There exists the need for the company to decrease its prices and redesign the efforts of its sales support. The aforementioned recommendation emanates from the assumption that by providing a good product at a fair price, a company can capitalize on the efforts of sales support to increase the volume of its sales.
Works Cited
Albarran, Alan B, Sylvia M Chan-Olmsted and Michael O Wirth. Handbook of Media Management And Economics. London: Routledge, 2006.
Barton, Jim. “TiVo-lution.” Queue 4.3 (2006): 28-35.
Chorianopoulos, Konstantinos and Diomidis Spinellis. “Coping with TiVo: Opportunities of the networked digital video recorder.” Telematics and Informatics 24.1 (2007): 48-58.
Ferrell, Odies C and Michael D Hartline. Marketing Strategy. Belmont: Cengage Learning , 2010.
Ireland, R Duane, Robert E Hoskisson and Michael A Hitt. Understanding Business Strategy: Concepts and Cases. Belmont: Cengage Learning, 2008.
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