TiVo Inc DVR vs Cable & Satellite TV DVR

• Strategy Implementation –

(Mohd Syariz)

• Evaluation & Control, & Conclusion –

(Abdul Hisham)

– busy life

• VCR

– Record your shows

– Problem: Incovenience, hard to program, picture

not perfectly clear, does not allow you to record

and play a tape at the same time

– TiVo revolutionized the home entertainment industry

when it pioneered the DVR technology

– PVR = DVR  personal / digital

video recorder

– 30th Sept 1999, TiVo made its

public offering for 16 per share in

Nasdaq

- Broadband content (eg: YouTube video,

picture, music video, songs, & Internet radio)

• Turn data into a digital form & stores in hard drive

instead of video cassette (VCR) & watch it during

leisure time.

• TiVo consumers can pause live TV, fast forward

through commercials, go back for instant replay and

watch programs at a convenient time

• External

• Internal

• Natural Environment

• Societal Environment

• Task Environment.

• Those physical resources,

wildlife & climate that are

an inherent part of

existence on Earth.

• TiVo does not use or not

directly or affected

• because produce a unique

product and service to

• Those social systems that influence the

long-term decisions.

– Economic Forces

– Technological Forces

– Political-Legal Forces

– Socio-cultural Forces

• TiVo understands trend of U.S

people with good economic situation

– Technological Forces (generate

problem-solving inventions)

• TiVo has made the first–move

• Identified the weakness of VCR

• Created DVR.

• TiVo has acquires license from same

concept as VCR

• Using the broadcasting program to

record in their DVR.

– Sociocultural forces (regulate the values,

mores, and customs of society)

• LED TV with HD, 5.1 Dts sound system

• Change the lifestyle of people to focus

• Refers to groups that directly affect a

corporation and are affected by the

corporation.

• Threat of new entrants:

– TiVo created their own pattern and

license their product from being

copy.

– Other companies copy the ideas

are still in the law cases.

• Rivalry among existing firms:

– Because of the Blue Ocean Strategy,

TiVo currently considered to be

• Threat of substitute products:

– TiVo may have afraid the

people of still using VCR as

the price are far more

cheaper.

– People may select use VCR

than DVR.

– TiVo monopoly

– TiVo has control the

buyers.

– Buyers cannot force the

price go down

– But buyers can use VCR.

• Bargaining power of buyers:

• Bargaining power of suppliers:

– TiVo is monopoly and the product

that they sell is unique.

– The product is unique

– Supplier not easy to find new

customer, tend to follow the needs

of TiVo

• Concerned with identifying and

developing an organization’s

resources and competencies.

• Using resources to gain

competitive advantage or gain

sustainability.

- Strongly shielded

- Patents

- Brand name

- Reputation

- Standardized mass

production

- Economies of scale

- Complicated

processes

- Easy duplicated

- Idea driven

High

(Hard to Imitate)

Low

(Easy to Imitate)

• TiVo is an Entrepreneurial model

• Specialized products of DVR and services

to market niches.

• Nobody knows what is a TiVo service and

DVR are.

• To improve consumers' television viewing experiences  developing a

technology that serves as a platform for delivering a variety of home

entertainment services.

• To put viewers in control of their television-viewing experience  provide

viewers the control of what they watch and when they want to watch it

• To have sales hit a reach of 14 million homes.

• To set the suitable price of the packages for

attracting more customers.

• Partnered with large established players

• High customer growth rates

• Able to attract fresh capital (i.e. Oct 2002)

• Multiple potential revenue streams

• Single suppliers for key product components

• Over reliance on partners

• Separated from customers by partners

• Partners squeezing pressure on value chain

• No further injection of cash

• Pricings are not matched

• Not enough advertisement / promotion

• High market growth

• Sponsored content

• Market research data

• Electronic commerce

• Replay is drawing most legal attraction

• Defensive strategies by established players

• Legal challenges and legislative agenda

could restrict opportunities

• Low barriers to entry

• Many competitors are heavy weights (eg;

ReplayTV, UltimateTV, DVD recorders, VCR)

GROWTH

• Concentration

Horizontal Growth

(Strategic Alliances

with other players)

STABILITY

• Not utilized

Change strategies

to cover losses

(layoff 25%)

RETRENCHMENT

• Turnaround

Hire new CEO

(Tom Roger in July

High

Low

Low

High

Indu

st

ry

Gro

w

th

Ra

te

Relative Market Share

Question Marks

Stars

Dogs

Cash Cows

• Pricing

• Advertisement

• Borrow more money

• Investment

• Hardware & software

• Introduce new line

of products

• Customer Support

Services

• Supply chain by

outsourcing

• Hiring new CEO

• Maintenance

• The sum total activities required for

execution of a strategic plan

• In TiVo, each level of management involve

in their strategic implementation

• Among steps has been done by TiVo are

developing programs, budget and

1) Rebate to customer

Introduced rebate $100 for each

new 100,000 subscribers. But half

of them failed to apply rebate due

shoebox effect which helpful for

TiVo revenue

2) Patented technology

Patented the company’s advanced

software and technology platform and

licensing its technology to third party

and generated excellent revenue

3) Catering people viewing habit

With the on demand program and

online streaming, TiVo able to capture

customer favorite program.

4) Implement rating system

Rating system program set into TiVo

box allow viewers to rate each tv

program they already watch. They

spend R&D & IT infrastructures to

develop software for rating system

by pressing controller to rate

5) Creating subscriber forum

TiVo forum composed of

communication through TiVo

community. It allows customer’s

feedback and discuss current

issues. TiVo provides dedicated

server database for this purpose.

6) Introduce HD technology

With the introducing of TiVo High

definition series 2 top boxes, they

can sustain the market so that not

left behind by broadcasting

• Strategic partnership

with Virgin Media Inc,

UK

• TiVo become the

exclusive provider of

middleware for Virgin Media's next generation

TV platform set top boxes

• Virgin Media become the exclusive distributor of

TiVo services in UK

• TiVo employed 451 employees. Among them:

• 48 in service operations

• 246 in R&D

• 44 in sales and marketing

• 113 in general and administration

• They also employed part time and

contract basis consultants

TiVo make staff retrenchment exercise in 2001

whereby they laid off:

• 80 employees (approx 25% of their workforce at

that time) in April

• 40 more employees (approx 20% of its remaining

workforce) in October

• By doing that, they eliminate unnecessary

workforce and plan for long run efficiency

The problem:

• Public couldn’t understand what it did.

“Stop and play back live TV? How can that be?”

The solution:

• Device would have to come to them by expand

advertising scheme.

1) Develop TiVo's Strategic Advertising Agency Partnership

Program

• Interactive advertising and enhance e-business solutions

to boost sales

• Advertising to specific viewers with the information it gains

about viewing habits

• A forty foot trailer with TiVo units

outside, a home theater inside, and

oversized floats tethered to the roof.

• The trailer then drove it to NASCAR

events, which commonly drew

80,000 spectators.

2) Multi part campaign - Road show,

sponsor, celebrity testimonial

– TiVo cannot found a price point

– Drop price (selling hardware at a significant

loss)

• The Solution

• To increase sales & drive penetration of TiVo service

• Market research (new & existing subscriber)

• Result favorable bundling TiVo unit & services

• Launch a subscription option (combines sales of services & box)

• No more upfront hardware costs.

– Pay $399 for hardware

– Pay $ 12.95 monthly for service subscription

– Or pay one time $ 200 lifetime service subscription

– Total = $554.4

• New Pricing Strategy

– Bundled Offering, Flexible Pricing and Service Commitment

– Contract Base

– Eliminate lifetime service option

– Monthly and prepaid options plan

• Research showed:

• Favorable for bundled deal

• Flexible pricing options

Number of

Year

Price per ($)

Prepaid ($) per

Year

Month

Year

1

19.95

240

224

2

18.95

455

369

• After implementing new pricing and advertisement

strategies:

– The income increase to be positive value

– Year 2007 = -$47 754

– Year 2008 = -$31 457

– Year 2009 = $ 103 592

The problem:

• Previous CEO fail to produce a good strategies.

• Not understand the industry and manage the company’s

growth.

• Company performance was drowning and future was in

doubt.

The solution:

• Hire new and experience CEO, the former NBC Cable,

Tom Rogers.

The problem:

• Other competitors develop more attractive package.

• Built in DVR and provided the equipment free to

subscribers.

The solution:

• Create product differentiation that gave extra advantages

compare to their competitor’s product

• Product Differentiation:

• Easy to install

• Give viewer controlling power on commercial

advertisement

The problem:

• Using broadcasting from others

• Other Broadcasting companies also develop DVR

• TiVo will be no longer cover the U.S market in long run

period

The solution:

• Need to develop or change business direction

• Example: ASTRO

marketing strategies.

• Under new CEO, TiVo start making profit and be a market

leader

• New Advertising strategy increase TiVo reputation generally.

• New Pricing Strategy help the company to expand it market

share

• Overall conclusion, TiVo can survive in the industry due to

improvement of their growth performance