I found this article while browsing for interesting commentary on the management transition on Tivo (thanks to PaidContent for the pointer). The article basically talks about the division between the Board and CEO regarding the direction of TiVo. I am a TiVo customer and fan and must say that I find the outgoing CEO’s logic to be the more compelling case.
As I understand it from reading this article and several others, the issue is whether TiVo should continue to pursue a go-it-alone strategy or move to partner more aggressively with cable providers. If I were Mike Ramsay, this is what the situation would have looked like to me:
1. My potential cable partners view my product as a feature that they need to own and offer.
2. Thus far, my cable partners have done a poor job of doing this themselves, so they must work with me if they want a decent offering.
3. For this to make sense, I need to see some real revenue potential here.
As the CEO, here is what I imagine the world would look like 3 years later if I did the deal with Comcast:
1. TiVo helps cable companies sign up lots of customers who are on the fence about spending $100-$300 on the PVR unit plus whatever the service costs but who are willing to buy directly from an existing cable company.
2. The bulk of TiVo’s new subscribers (but not revenue) start to come from this channel. This would not be hard to do if you think about the size of the installed base of cable subscribers vs. the current number of TiVo subscribers.
3. Comcast (or whoever) realizes that they have acquired the customer and that the marginal value of having a TiVo branded service is not that high and they go with an offering provided by a STB manufacturer or other software partner.
If this happens, TiVo finds itself in an awkward position. They have basically just helped a competitor build a good business by piggybacking off of their brand. What would TiVo have to show for it? Well, it is questionable whether any of the people who were TiVo customers under Comcast would revolt and go out and spend money to buy a PVR if Comcast were to replace the TiVo branded offering with something else. Also, Comcast will likely have a much more competitive offering by then and will know a whole lot more about how to market and promote such a service.
This is by no means an easy problem. And TiVo has some real short term questions about the viability of the model that they are currently pursuing. If Comcast’s offer provided a way for TiVo to actually benefit from the relationship (all that I have read suggests that the offer was pretty low), the story might be different. But I am not sure that TiVo really has any other choice at this point. This idea of being a pure software/service is attractive on face value, but few platforms are more tightly controlled than the set-top box. I don’t see this being a path that will eventually elevate TiVo to great business heights.
Comments? Email me at blog @ charleshudson.net