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Unfortunately, with monthly service fees, TiVo is guaranteed to have no more than marginal success. People don't like having to pay contract fees on a perpetual basis for something they've "bought." Note that putting fuel in a car is a completely different mentality and so is a service contract like a phone line.


I agree that it sucks to have to pay a monthly subscription. But people still buy televisions that are near useless without a cable or satellite subscription, 'phones that are useless without a service contract, and the sheep are flockin to XM and Sirius. So I'm not sure that I agree with your conclusion.

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So how can TiVo change their model? I really don't know. Even selling lifetime subscriptions for $200 to everyone (or rather rolling in to the base price of the hardware) likely won't cut it. You see, Tribune Media Services (TMS), the program listing providers, don't supply data for free. I have a pretty good idea of how much TiVo pays every month for this and therefore know why their current model is in place. What really boggles my mind is how a company like Snapstream can sell their BeyondTV3 application for so cheap and still provide free listings - they're also with Tribune and I know approximately how much they should be paying as well.


A better model might be to amortise the hardware cost into a monthly subscription too. This worked to get everyone buying cellphones. Who would have spent $500 on a phone otherwise? A few perhaps, but the vast majority wouldn't. Of course that model would require an annual (or more likely) bi-annual contract to prevent people abusing that.

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TiVo really has to move into large contracts with CableCo's - that's the only mass-market avenue they've yet to tap. Knowing the Cabe sheep mentality however, this would be an extremely hard sell.

Yeah, that's an incredibly hard sell. The problem is two-fold. Firstly, CableCo provides a large chunk of a network's subscribers, and hence advertising revenue. The networks aren't going to be too happy for CableCo to provide the means for commerical skipping and will resist that using every trick in the book - both financial and legal. The second is that CableCo don't want to pay a relatively small company like TiVo when they have the resources to do it themselves. You've already noted that they have a competitive advantage over TiVo because they don't have to pay for guide data.

The result of these two factors is CableCo taking their time rolling out their own DVRs. For example, Comcast DVR has been promised for over 2 years and is only just (finally) being offered in my area. Everything I've read about it online suggests that it's finally starting to be useful.
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