Will the DVR pioneer go belly up, or has it just begun to fight?
By Cliff Roth
When TiVo announced last month that it had signed a deal with Comcast, America's largest cable TV operator, to offer TiVo-equipped set-top boxes, the stock price of the struggling PVR/DVR innovator shot up by almost 50 percent, from about $4 to $6.
Talk about lowered expectations: back in 1999, two years after TiVo began operations, its stock price peaked at $75, and regularly traded between $30 and $45.
Although it arrived in the era of the dot-com boom, TiVo was a different animal, a consumer electronics company. Unlike the smoke and mirrors of so many internet start-ups, TiVo produced something real, something that people actually seemed to want: the ability to watch what you want, when you want, by recording TV programs onto a hard disk.
As a brand name, TiVo has achieved heights most marketers can only dream about: TiVo is a household word.
So how can it be that in 2005, with over three million subscribers, the eight year-old company is still losing money, at a rate of $80 million per year? And why would one deal with Comcast suddenly change TiVo's game so significantly? With the onslaught of lower-priced competition, what's TiVo's long-term outlook? Will the company survive?
It's a story as old as the Bible: that of the leader who never quite makes it to "the promised land."
For TiVo, the pioneering digital video recorder whose very name, like "Xerox" was for a previous generation, has become synonymous with a specific technology and application, the promised land is ubiquity: a digital video recorder (DVR) in every home. (TiVo calls its system a PVR, for personal video recorder—there's no difference, other than a trademark.) With cable and satellite TV systems and consumer electronics dealers all offering DVR devices and services, this technology is on a roll. Even Bill Gates' Microsoft wants a piece of this action, as evidenced by the ever-expanding offering of Windows XP Media Center PCs.