TiVo Bulking Up

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I thought I had covered this more explicitly than in a comment, but Multichannel news has a full article about TiVo’s concentration on cable.

First, TiVo’s development is all going toward cable:

“All of TiVo’s product development right now is oriented toward cable,” said Jeff Klugman, senior vice president of TiVo’s service-provider and advertising engineering division. “As a company, we are focused on supporting the cable industry.”

Added Klugman: “None of our product development is going to satellite.”

Second, TiVo is bulking up on supporting CableCARD users itself:

TiVo also has established a dedicated CableCard-support group, which will field front-line calls from customers who have questions or problems installing CableCards  …

TiVo has established procedures with big operators about escalating technical-support issues. These are not technically reciprocal support agreements; rather, TiVo has identified the appropriate customer-service contacts at each operator. (Klugman declined to say how many employees are on the TiVo CableCard-support team.)

CableCard has been a politically charged issue, and many operators are still adjusting to the Federal Communications Commission’s fiat that they use the cards in their own set-tops starting July 1.

But Klugman said TiVo wants to fix CableCard-related issues collaboratively with operators. “We’ve been a very good actor,” he said. “We could have gone to government agencies and complained. Instead we’re saying, ‘Let’s work together and get this to work right.’ ”

And, of course there is TiVoSoft – the TiVo UI on the cable box.

TiVo has hired a new SVP and CMO, new positions which probably implies more spending. TiVo is also spending big (for TiVo) on advertising this year, and the ads don’t look good. Some of that advertising is geared toward supporting the brand, and therefore the TiVoSoft initiative. The TiVo HD looks like a subsidized box, and reduced hardware subsidies have proven disasterous. 

MSD is now offered at TiVo.com and Lifetime deals have been appearing. DirecTV Subs will fall rapidly. TiVo couldn’t hold the $19.95/mo contract and can’t get more than the seemingly permanent $299 special for the 3yr pre-pay.

What TiVo has going for it are the Comcast (August) and Cox (late 2007) TiVoSoft rollouts and the TiVo HD.

TiVo is going to have to sell a huge number of boxes to make the advertising spend pay off. Box subsidies are variable, but ad spending is fixed. At $300, its doubtful TiVo’s Gross Adds can offset the SAC cost.

Allocating some ad spending to TiVoSoft creates a meaningful SAC in that low revenue segment.

TiVo still has tremdous challenges to meet before become a successful company.

The few good moves lately need to be followed by many more.

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