TiVo has been on the corporate deathwatch for some time, but the company doesn’t show any sign of going away. Instead, the DVR maker ended 2005 with a flurry of moves-such as its plans to incorporate the ability to transfer recorded shows to iPods-that are likely to keep the company fresh and relevant this year.
TiVo CEO Tom Rogers has big plans for 2006. He’s got to swing for the fences because this is the first year that TiVo is largely untethered to DirecTV, the source of nearly two-thirds of its distribution. Opportunities for growth are coming too, such as when its partnership with Comcast to offer TiVo functionality in the operator’s Motorola DVRs takes effect later this year.
The question is whether TiVo can capture enough momentum from the Comcast deal and its new distribution and marketing plans to finally quiet the skeptics or whether it will be left in the dust as DirecTV pulls away.
“We need to answer the questions that TiVo distribution growth looks challenged, and we have to answer how to grow at a faster rate,” Mr. Rogers said. “We know people say TiVo has become commoditized. We have to show how it’s differentiated, to show it can break way out of the pack.”
TiVo will test a number of pricing strategies in 2006, such as eliminating the upfront box cost and going with just a monthly fee.
TiVo will also market aggressively to the 36 million to 40 million analog cable customers. That’s an unserved market because cable DVRs are available only to digital cable customers. Already, about 30 percent of TiVo’s non-DirecTV subscribers are analog customers. In the past few months the number of new TiVo customers who are analog-only has grown to 50 percent as TiVo tweaked its marketing to focus on areas with higher analog penetration.
TiVo will also introduce new features in 2006, including a stand-alone high-definition cable-card unit, multiple tuners and personalization tools that will help viewers find the programming they most want to watch.
Look for advertising to be a big focus too as TiVo aims to cozy up to Madison Avenue. The company will introduce new tools such as an opt-in ad search that enables viewers to seek out commercials they want to see, telescoping ads and branded ads that appear on the screen while the commercial is being fast-forwarded. “We still have to make sure advertising is a key underpinning of the television industry,” Mr. Rogers said.
Mr. Rogers acknowledged that TiVo dug itself into a hole when it failed to capitalize sooner on developing partnerships with multiple system operators and was slow to roll out an HD box. He hopes to dig out this year.
It won’t be easy. About 10 million households have at least one DVR, and close to 90 percent of them are supplied by either their satellite provider or their cable operator, said Bruce Leichtman, president of Leichtman Research Group.
But there is hope. TiVo needs to build on its strong brand perception to position itself as “the best” and target the high end of the market with somewhat of a snob appeal, Mr. Leichtman said.
“This will help them in retaining and acquiring subscribers for the standalone service, as well for the high-end cable offerings that we might see beginning in 2006,” he said.
At A Glance
Title: CEO of TiVo
How long in current position: Since July 2005
Year of birth: 1954
Place of birth: New Rochelle, N.Y.
What to watch for: 2006 will be a make-or-break year for TiVo as it rolls out with Comcast. Look for additional deals with other cable operators, new advertising features and new pricing and distribution strategies.
Who knew? Mr. Rogers starts Sunday mornings
by watching news shows recorded on TiVo, armed with four jelly doughnuts from Dunkin’ Donuts. He said he finishes the doughnuts long before he finishes the news shows.