The discussion wouldn’t be complete without an explanation of how I think TiVo could pull this off. There have been a lot of conversations about how Apple should buy TiVo (never going to happen) or that TiVo should be giving away more units (not viable with their current balance sheet or access to public equity) or numerous other approaches to ensuring their survival. I don’t claim to know better than anyone else, but I think TiVo is already beginning to execute the right strategy; it just may be a little late in the process to do so. Some steps…
1) TiVo needs to fix this PR mess that’s gathering steam. The one thing that Ramsay appears to do really poorly is communicate with the public. There are real perception problems out there (hell, even www.tivocommunity.com is beginning to sound the death knell) and TiVo needs a full court press to stem this tide or it will be all over, solid subscriber growth or not. TiVo needs to stop spending gobs of cash on esoteric print advertising and start spending more time repositioning itself and communicating this new position to the public through more efficient channels like PR and Web advertising. Merely getting the word out that TiVo exists and is cool will not prevent any buyer from hearing that TiVo is about to die and waiting for their Comcast guy instead. I think Jeff Jarvis was closest to the right message when he said that TiVo should “market (itself) as the alternative to cable that does cable and the internet and more, as tomorrow's everything, anywhere, anytime, any way ticket to media freedom.” Needs some work, but nonetheless, it’s moving in the right direction.
2) TiVo needs to continue to support cable and satellite, for now. A lot of focus has been paid to retrenching and shifting completely away from cable and satellite to IP delivered content exclusively. This is a nice idea and it would cure a lot of headaches, but there is simply not enough compelling content available via IP... yet. TiVo’s subscriber growth would not only stall, their existing subscribers would flee en masse. TiVo would never survive the canyon of losses that exist between today and the vibrant IP content market of the future. Instead, TiVo must remain distributor agnostic and work aggressively to make set-top/TiVo integration more robust. I know this is easier said than done, and technologies like CableCARD are far from perfect, but unfortunately access to that content is still too valuable to abandon.
3) TiVo should stop focusing on structuring cable and satellite distribution deals (a bit like slamming your head against the wall repeatedly at this point). Thoughts that a deal might still happen keep investors on the hook, but it just isn’t reality. Structuring deals with telcos would make more sense although most of the RBOCs would carry similar baggage to the cab/sat guys (especially in terms of TiVo deciding their technology direction and earning a few bucks). But smaller independent regional providers and emerging wireless broadband providers could be a really interesting play and there will be a lot of those guys out there soon. They could really use a margin-rich service like TV to deliver over their networks and TiVo should still have a strong TV brand when these services start to go live.
4) TiVo must continue to open their device up to outside developers. While this is a difficult thing for TiVo to do (it kills a lot of the control TiVo might exercise in the future), it is also next to impossible for their competitors to do (with the possible exception of Microsoft, but they have their own issues). I’ve seen some interesting applications already and the SDK is incomplete and has only been out for a couple of months. Give that community more control and more time to enrich the platform and TiVo should find itself with a value proposition that accelerates well past what Moto and SA will be able to deliver anytime in the near future.
5) TiVo must focus on providing access to IP content as quickly as possible. By opening the device up to any IP content (and when I say “any” I mean substance, not format), TiVo again distances itself from what Moto and SA will be willing and able to do. By structuring deals with content aggregators, or even content owners themselves (although this is messy and time consuming), TiVo can begin to better justify the consumer’s investment in hardware and services. People spend money on devices and services if they provide them simple access to content (they do so today for iPods, satellite radios, satellite TVs and DVD players with Netflix and at much larger dollar amounts). However, people don’t like paying a service fee for something they don’t really see as a service (like Programming Guide data), especially when they get that stuff for “free” elsewhere. TiVo should bundle a bunch of IP content with their service (and simple access to more content) and gradually increase their fees over time by providing packages of content (much the same way as cab/sat does today). Then they can subsidize their own devices while still providing decentralized access to an exploding content market.
6) TiVo must get their s*it together with HD. Their first foray was a disaster. Most of the comments I read about the advantage of Moto’s Comcast box these days focus as much attention on the HD support as the cost differential. I know the hardware is a bit more expensive and they don’t have the economies of scale to deal effectively with that right now, but if they can’t get a decent box out at a decent price, even at a loss, this will kill them as fast as anything else. On this one, unfortunately, I don’t have an answer as I don’t have enough information on their hardware situation to do it justice. But it’s a problem that needs attention, badly.